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On January 1, 2021, the UK officially withdrew from the European Union market's customs union. Since then, a customs barrier has been formally established between the UK and the European Union.
Brexit Influence on Cross-Border Ecommerce
Brexit's official exit from European customs creates changes in how Amazon operates across the UK and EU customs, impacting business in Europe.
Here are some of the most notable changes:
Logistics Changes:
1. Amazon will ship products to Amazon warehouses and operating centers on the border between the UK and the European Union, maintaining sufficient inventory on both sides to ensure the usual sale of products in the UK and European Union countries/regions.
2. Separately managed UK and EU inventory, respectively. European Amazon centers will have two sets of restriction principles: one for all UK inventory storage types and the other for EU inventory (Germany, France, Italy, Spain and the Netherlands).
3. Goods requiring cross-border transport between the UK and European Union customs, such as those using an overseas warehouse for delivery, reception of returned goods, transferring to overseas warehouse, complying with cross-border shipping requirements; promptly provide your carrier with relevant information and documentation.
4. Considering your business situation, extend stockpile times and transit times appropriately to deal with possible cross-border delivery delays to avoid affecting the seller's profit.
5. Due to the impact of European policies, such as changes in UK e-commerce VAT regulations, packages under £15 will be officially subject to VAT, so the seller must also make sure that the goods' price includes VAT.
New UK product or labeling regulations:
Most European Union products' sales require "CE certification," the CE symbol is the "identity card" for products to be allowed in the European Union.
After the UK leaves the European Union, CE certification no longer applies to British products. The UK Government recently launched the UKCA certification.
Starting January 1, 2021, the UKCA marking will officially be in use; for products sold in the UK, the CE marking will gradually become unrecognized; application of UKCA marking is required!
What are the UKCA requirements:
1. Safety reporting: various products require safety reporting according to various directives, such as EN71 for toys, LVD reporting for electrical products;
2. Factory commitment: Factories needs to commit to comply with UKCA, including factory information, contact information, product models, safety report information, legal signature;
3. Product label: Products and product packaging must include product model (in compliance with safety report model and photos), factory information, UK factory representative information, UK importer and representative information, UKCA logo;
4. UK Representative: For cross-border sellers, it is essential to find companies that do business in the UK to provide import guarantee, commitment to quality and safety of products, whose information is shown on the product and product packaging.
If the above conditions are not met, even if there is no problem with the product quality, in the end, it will be destroyed and returned.
Note: For the UK, the effective date of the UKCA marking is January 1, 2021. Before this date, goods entered or in transit are not governed by this regime. Evidence of goods on the road includes orders, invoices, bills of lading.
Changes related to intellectual property:
Due to trademark law changes, European Union trademarks shall no longer be valid in the UK as of January 1, 2021; trademark owners must have separate trademarks in the UK. The UK and the European Union Intellectual Property Office.
For sellers who have already used the EU trademark to register with Amazon, Amazon shall automatically add the UK trademark to the respective trademark accounts.
Sellers can automatically get trademark protection at UK sites with no additional action required.
Sellers who have used European Union trademarks to register Amazon trademarks but do not want to add UK trademarks automatically need to add any other brands to Amazon Trademark accounts manually.
Changes to UK e-commerce VAT laws:
With the United Kingdom withdrawing from the European Union on January 1, 2021, UK and EU VAT regulations on imported goods and certain goods within the Union EU of specific conditions are subject to change.
Implement a series of new VAT regulations to ensure that goods originating outside the UK are subject to the same value-added tax as goods already in the UK.
Sellers in the following three cases need to comply with the new UK VAT regulations:
1. Delivery from outside the UK to UK buyers
2. Delivery of inventory in the UK to UK buyers
3. Delivery from warehouses outside the UK to UK companies and organizations
Changes in trademark registration:
Starting January 1, 2021, European Union trademarks will no longer be valid in the UK, and trademark owners must have separate trademarks in the UK and the Intellectual Property Office of the European Union.
The change is because the UK Intellectual Property Office is creating corresponding UK trademarks for all owners who currently have valid European Union trademarks.
Registered Amazon trademarks will have these new UK trademarks automatically added to the respective European Union trademark owners' accounts.
EORI number:
In European countries, all businesses with economic activities, especially import and export businesses, must have EORI (Economic Operators Registration and Identification) numbers. After the UK officially leaves the European Union, EORIs beginning with GB in the UK will not be valid in the European Union. If you want to market in the UK + European Union, you will need an EORI number in the UK and an EORI in the European Union; thus, 2 EORI numbers in total.
UK Customs stated that it would implement the tax law reform on goods imported into the UK beginning January 1, 2021. The specific requirements are:
All imported goods with a declared value below £135 are subject to value-added tax. The new tax law removes the original tax exemption for small-value imports, i.e., goods with a declared value of no more than £15, previously exempt from the original tax, are now also subject to value-added tax at the rate of 20%.
For all goods imported into the UK:
Corporation recipients must provide the economic operator registration number (EORI number) and value-added tax (VAT number) in the UK. The EU EORI number will no longer be applicable in the UK import-export operations.
If the recipient is an e-commerce platform (OMP), the e-commerce platform will collect and account for value-added tax. Value-added taxes on imported goods sold directly to UK consumers in the UK will continue to be accounted for by overseas sellers, without the involvement of e-commerce platforms (OMP);
For products sent from abroad and sold directly to UK recipients without the participation of an e-commerce platform (OMP)
As a requirement, the overseas seller must register the economic operator registration identification number (EORI number) and value-added tax number (VAT number) and pay VAT to UK Customs (HMRC).
If a corporate customer is VAT registered in the UK and provides a valid VAT registration number to the seller, the VAT calculation will depend on the customer's refund fee.