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Welcome to the ILG Brexit Hub. Find out how the new trade deal affects your deliveries and fulfilment. Check this page for regular updates, information and advice.
There are several VAT reforms which affect the sending of goods to the EU from 1st July 2021. The key changes are listed below:
1. Removal of the €22 VAT exemption for imports:
The VAT exemption currently in place for goods imported into the EU with a value of up to €22 will be removed, meaning these shipments will now be subject to VAT. Therefore, these low value goods will also require formal customs clearance.
2. Launch of the Import One Stop Shop (IOSS) Platform for imports up to €150:
The EU is launching an Import One Stop Shop (IOSS) platform to simplify the declaration and payment of VAT for B2C imports up to a value of €150.
Sellers who are registered for IOSS will receive a unique registration number that will be valid for the declaration and payment of VAT on all cross-border supplies of goods to the EU.
This optional platform only requires you to register with a single EU member state to manage your sales VAT throughout the EU, removing the need to register for VAT in every country to which you are selling goods.
If you are a non-EU based supplier selling goods to consumers in the EU, registering with the IOSS allows you to collect accurate VAT for the purchase from the consumer at the point of sale, which can then be declared and paid in a periodic VAT return.
Shipments containing a valid IOSS number will not be subject to import VAT, which may help to quicken their movement through customs.
If your company does not have an EU-based establishment and you wish to register for the IOSS, you will need to appoint an intermediary to settle VAT through this platform. Please note that ILG is not able to provide advice on this matter.
Non-EU businesses with no physical presence in the EU will need to appoint an intermediary to handle VAT accounting on their behalf. This is mandatory for IOSS registered businesses.
Registering for the IOSS platform is not obligatory and you can continue to declare and pay VAT on EU imports as you do today, either on a duty paid or unpaid basis.
3. Specific changes if you sell through an online marketplace:
Online market places are now responsible for their EU VAT compliance. They can register for the IOSS platform with an EU member of state of their choice.
If you sell through an online marketplace, we advise that you liaise with the marketplace to understand the changes they are implementing from 1st July and review how they may affect your business.
We continue to liaise with our carriage partners to understand how introduction of the IOSS will affect imports into the EU through their networks. We will provide further updates when we have received and consolidated their feedback.
If you have already registered or are registering for IOSS, please share your IOSS registration number with your usual ILG contact. We will hold this as static information within our system to be passed to the carriers for exports to the EU.
If you have any specific questions about the rollout of IOSS and the wider VAT changes from the 1st July, we advise you to contact your won tax representatives. If you would like to be introduced to our external tax advisors or have generic questions, please reach out to your usual ILG contact.
Rules of Origin Requirements
We previously shared that to benefit from the UK-EU trade deal and zero tariffs' goods must meet the UK-EU rules of preferential origin, as stipulated by the Free Trade Agreement (FTA). Since these rules came into place, we have seen many disparities in duties and taxes being applied coupled with queries and questions from our clients.
As these country-of-origin rules in the FTA appear more complex than initially expected, we have sought some independent professional advice to support our clients.
The European Commission recently issued this guidance which is specifically intended for companies operating from distribution centres located in the UK which receive goods manufactured in the EU and then send those goods back to EU destinations.
Specifically, this guidance confirms that goods that originate in the EU but are exported to the UK and released into free circulation and then re-shipped to the EU cannot benefit under the UK-EU FTA preferences and duties are applicable. We have since had this independently verified and EU-originating goods that undergo minimal or no processing in the UK and are then re-exported from UK and imported into the EU cannot claim preferential (0%) duty rate, as the goods are neither Union Goods nor of UK origin.
We advise that all our clients seek their own independent advice but given some of the challenges and complexities we know our clients have been facing we wanted to share this guidance with you as soon as possible.
ILG Poland - Opening May 2021
We appreciate that many of our clients are being adversely impacted by the consequences of Brexit. As such we want to re-affirm that we are on track to open our first site in mainland Europe, in Wroclaw, Poland. The fit out on this 50,000 sq. ft is well underway with the first ILG clients go live in this facility in the first week of May 2021.
We have recently been advised that Poland has removed the requirement for UK businesses with Polish VAT registrations to appoint a Fiscal Representative. This should make it simpler for UK companies wishing to store and distribute goods from Poland to set up and begin operations.
ILG remain committed to helping our clients mitigate the impacts of Brexit and the rules of origin for our clients. If you do want to explore moving your European fulfilment to our new Poland site, please reach out to the team via email@example.com where we will be happy to provide a full quotation and proposal.
We have several implementation openings for this summer into this facility so if you are adversely being impacted by Brexit, please reach out to us and we are here to help.
We appreciate that this continues to be stressful time and we thank you for your patience whilst we and our carriers work through the changes. Should you have any questions, please do not hesitate to contact me directly, your usual ILG contact or the team through firstname.lastname@example.org.
Since the Brexit transition our Partner Carriers have continued to deal with unprecedented volumes whilst trying to maintain services to all European Destinations. There have been challenges along the way, but I am confident that the volumes are starting to ease, and we should hopefully see an improvement on lead times to the EU albeit under a customs pending remit. I hope that any challenges you have faced have been rectified and I would happily welcome feedback around what is now working for you but more importantly what challenges remain daily.
Throughout February we have committed to speaking with our carriers every day to ensure we remain on top of any service issues and disruption so we can act if needs be. Thankfully, the vast majority of these meetings have been short, but we have today been advised by UPS that they will continue to relax service commitments to key destinations into Europe.
UPS have now extended their +1 day Standard peak relax for deliveries in certain countries (Italy, United Kingdom, Belgium, Ireland, Germany), until Easter Sunday 4th April for Domestic and Standard road shipments.
To allow the necessary time to clear current backlogs, UPS have announced they will continue to relax the delivery time commitments from the UK to the following countries until further notice, for both Standard and Express shipments:
We apologise for the obvious disruption this will cause to you and your clients and appreciate your understanding as this situation is beyond the control of ILG. If this is due to have an impact on your shipping please do not hesitate to contact your Customer Relationship Manager or the team on email@example.com so we can look at alternatives for you.
Further to our previous update on the Brexit situation, please see below the latest information:
More broadly, our teams are now seeing some significant challenges in the movement of goods between the UK and Europe as a direct consequence of the changes brought about by Brexit. The wider impacts on the industry are creating an incredibly fluid situation and we cannot rule out other service suspensions by our carriage providers imposed at short notice. Should this be the case, we will keep you informed via email and provide as much prior warning as possible.
Our teams are working tirelessly to keep your shipments moving, but we are dealing with a significant increase in queries which is impacting our response times and we are attempting to resolve queries with an associated deadline as a priority.
ILG remains committed to helping our customers mitigate the impact of Brexit, but we and our carriers are now seeing a particularly challenging situation regarding shipping to the EU, especially on a DAP basis. Our teams are dealing with a significantly higher number of queries across the business, which is affecting our response times and causing us to prioritise our responses carefully.
We ask our customers to urgently review the impact of these challenges, which are a direct consequence of Brexit.
Please see the following specific updates:
On a DAP basis, duty and taxes are the responsibility of the receiver. They will be contacted by the courier and required to pay any duty/tax prior to the shipment being delivered.
All DAP shipments are subject to the below customs clearance fees:
The receiver is then responsible for paying the duty and import VAT to the carrier before delivery can take place.
It has recently come to light that each carrier levies a disbursement fee in addition to the duty and tax. This disbursement fee is charged due to the carriers pre-paying the duty and tax payable and acts as an administration fee. This is an extra cost which the receiver is required to pay in addition to the outstanding duty and tax. Since 1st January 2021, we have seen many receivers refuse these charges on shipments sent with DAP terms.
We have set out here the relevant disbursement charges per country to give you an idea of what the receiver is being asked to pay upon import. Carriers also charge VAT on disbursement fees.
Please note that the application of duty and tax on a DAP service is a direct transaction between the receiver and the carrier. As such, in the instance that the receiver disagrees with the charge being levied, the onus is on the receiver to dispute the charges locally. If this situation does arise, ILG will do all it can to assist.
On a DDP basis, duty and taxes are the responsibility of the seller. For DDP shipments, duty is paid in advance by our carriers, billed to ILG and then passed back to you.
The charges for shipments sent from the UK to EU on a DDP basis are below:
1. The Export Customs Clearance Fee as with DDU shipments:
2.The DDP accessorial fee listed below:
3. The duty and tax amount.
4. An ILG arrangement fee, which is set at 3% with a minimum charge of £5.00 per invoice and up to a maximum charge of £250.00 per invoice.
It is worth noting that, should you decide to send on a DDP basis, the disbursement fee alluded to earlier is not applicable. However, you would be charged a DDP administration fee as you have opted to prepay the customs charges.
Unless instructed otherwise, ILG will send all shipments on a DAP basis.
If you are unsure about any of the above, please tell us as soon as possible.
We are receiving daily updates from our partner carriers and will notify our customers of any potential changes.
If you have any questions, please reach out to any member of the ILG team or contact us at firstname.lastname@example.org
Keep on top of all your must-do Brexit tasks with the ILG Brexit Checklist. Comply with the new regulations and check for updates as requirements change.
Read our Carrier Price List for a guide to additional disbursement fees charged by carriers for DAP deliveries to the EU from 01.01.21.
Watch our webinar video for essential advice on mitigating the risk of delays and financial loss. Get expert guidance from our panel of specialists in supply chain, VAT and customs.
The UK and EU have negotiated a new trade deal which changes how goods are imported or exported to the EU. New regulations apply from the end of the Brexit transition period on 1st January 2021. ILG helps you minimise disruption and additional costs with updates on the latest regulations and requirements.
Contact ILG if you have any Brexit-related delivery or fulfilment queries. Email us at email@example.com