There are many online sellers working from home, buying and selling their products locally and also to the EU countries. With time UK's annual revenue from online retail and ecommerce has reached more than £150 billion.
Due to technology and barrier free trade that UK enjoys due to its EU membership, over the years UKs e-commerce industry has developed its major market in Europe. According to a report, Great Britain accounts for 33% of all the online sales in the EU. This means that the Brexit vote has the potential to majorly affect current market trends on both sides of the English borders.
What affect will No deal Brexit have on the online trade?
The online businesses selling parcels to EU should be aware of the following:
- All goods will need customs clearance and there will be custom clearance charges.
- All senders to EU countries will now be required to complete a commercial invoice.
- Goods sent across EU borders would be liable to duties and taxes.
- Increased procedural requirements will result in delayed transit times.
At present, British companies do not pay import duties on goods exported to Europe. However, in case there is no deal Brexit there will be additional costs in administration and Custom clearance charges which will also impact orders.
According to guardian the Institute of Exports explained “If your stock is imported to an EU warehouse, i.e. the EU is the first port of entry, then the seller will have to register a non-resident VAT registration in that EU country.”. This means that the goods will attract the local VAT and other import duties.
This will result in increased costs and it will take longer for the goods to reach the other side of the UK borders. Hard Brexit or no deal Brexit would also mean that the VAT will be charged on the borders. Both the increase in price and the impact of VAT will be reflected in the prices of the products. This might make some of the products less attractive to the customers. This will affect the small businesses as they already have small business margins.
We have some good news as well, as we have already seen the depreciation in the pound value, this will have a positive impact on the sales overseas. This can help retailers to cope with the additional costs.
The no deal Brexit would also mean that the online retailers can create new supply chains. This might allow them to buy in the cheap markets as well.
The overall picture might not look too bad, however, every business needs to prepare itself for the impact of Brexit on its particular business.
Keep visiting our website, we are chartered certified accountant in Croydon London, for more updated information on Brexit.