Brexit Impact on Italian E-commerce Selling in UK

Tecnoacquisti.com
Online commerce and invoicing

There are many Italian ecommerce owners selling in the UK wondering what has changed for their business with Brexit. As of January 31, 2020, the United Kingdom officially ceased to be part of the European Union, with inevitable consequences for the entire market. In this article, we will try to address all the doubts regarding this issue.

Brexit: what is it?

Before understanding what has actually changed with Brexit for Italian ecommerce owners selling in the UK, it is appropriate to clarify what it is about. As mentioned, since January 31, 2020 the United Kingdom, including England, Wales, Scotland, and Northern Ireland, is no longer a member country of the European Union. This is certainly not unexpected news, as the UK had previously shown a certain "detachment" from EU policies, for example by rejecting the Euro and maintaining the Pound. In the country's intentions, we certainly find the search for an improvement in economic conditions, especially by resorting to the adoption of protectionist systems and customs. But what repercussions does this choice have for the European market? There are indeed many doubts on the matter, especially for all those who do business with the UK market, including Italian online shops.

Useful resources for selling in the UK

How to obtain a British VAT number?

How to manage UK VAT with PrestaShop?

Where can I find the customs form CN23?

Where can I find the tariff code for my goods?

Where can I find the EORI code?

Italian e-commerce: the consequences of Brexit

Following the Brexit of the United Kingdom, some consequences have emerged for Italian ecommerce owners. Initially, they will face a mobility and trade that is certainly less fluid. By deciding to leave the single market, the Government has essentially decreed the end of the free movement of people, services, goods, and capital with the European Union. This situation inevitably leads to a specific consequence.

Trade between the United Kingdom and the EU will indeed be slower, as it can no longer be "automatic" as it was in the recent past. But it doesn't stop there. When additional customs costs are applied, maintaining a truly competitive and attractive offer for customers, capable of beating competitors on time, could become a real challenge.

Looking in detail, we can see that for sales from Italy and the European Union in general to the United Kingdom, no additional cost will be calculated as long as the purchase amount does not exceed £135. VAT in this case will still be declared and paid by the European merchant. The situation changes for purchases over £135, as potential customs duties may come into play, not to mention that shipping will also be subject to VAT.

It should also be noted that since the United Kingdom has left the European Union, any goods in transit will be subject to checks. Finally, but not least, due to Brexit, there will also be significant consequences for Italian ecommerce owners regarding data protection policies. Fortunately, the first six months of 2021 will be considered a transition period in this regard, so transfers related to personal data will still be possible.

During this period, it will be up to the United Kingdom to recognize that the privacy regulations issued by the EU can be considered valid for the transfer of data from the country to the Union. However, in the event that no agreement is reached, customers of any Italian ecommerce should also consent to the transfer of data to the United Kingdom. Not being deemed adequate by the Union itself, the negative repercussions on trade could be significant.

Brexit and tax consequences for Italian online shops

At this point, it will surely be clearer that the entire situation related to Brexit for Italian online shops will become more complicated. But the consequences will not only be logistical due to the physiological slowdown caused by customs, but also purely fiscal. We have said that for transactions exceeding 135 pounds, VAT will have to be calculated on the total value of the order, including shipping costs.

For the owners of e-commerce in our country, this also means obtaining a UK VAT number. We remind you that the UK VAT is at 20% and that the regime will need to be managed through a specific form. As for the shipping of packages, the bureaucratic aspect will also become more complicated. Exchanges with the United Kingdom, in fact, due to Brexit, are no longer to be considered intra-European, but rather extra-European. Therefore, within each shipment, the following documents must be included:

Customs declaration CN23: four copies.
Commercial invoice: four copies.

This for the owners of e-commerce in our country also means obtaining a British VAT number.

A copy of the aforementioned documents must be placed inside the package, while two copies externally in a transparent envelope to facilitate customs checks. The last copy, on the other hand, must be kept directly by the owner of the ecommerce in their personal records. We must also specify that these formalities are to be considered mandatory for any type of packaging, package, or letter. In the latter case, documents are excluded from this discussion, as they are not subject to customs declaration.

However, aside from this exception, any other shipment must comply with these rules, even those that include gifts or free samples of products. In detail, the CN23 form must include:

Shipping category. Among the main ones, we find sale, non-commercial if it concerns the sending of free samples or promotional material, the return of any returns, and others.
Contents of the shipment. The form must contain an accurate description of what is being shipped, the weight, the country of origin, the value, etc...
Sender and recipient. In addition to the personal information, the phone numbers of both parties, seller and customer, must also be included.

In addition to the aforementioned information, the CN23 form must also include additional data, including:

HS Code. This is a 6-digit number used by European customs for calculating any taxes and customs duties.
EORI Code. Code provided directly by customs authorities to be included on the invoice as well.
UK VAT Number. As mentioned, for orders under £135, the Italian seller will collect VAT, which must then be declared in the UK after obtaining a UK VAT number.

Italian e-commerce and Brexit: in conclusion

That Brexit will have a truly significant impact on the trade exchanges between the United Kingdom and the European Union is beyond doubt. However, this does not mean that all these issues cannot also represent an opportunity and, more generally, an opportunity to seize for all those e-commerce businesses that respond to market demands sooner than others.