How European businesses adapt to Brexit

It has been almost two months since the UK implemented a post-Brexit free trade agreement with the European Union.

Under the new rules, European companies must pay UK sales tax or VAT directly on sales under UK 135 (5 155; $ 190), so they will now have to register and file quarterly declarations with UK authorities.

Other changes include custom declarations and additional paperwork. So, how have they adapted so far and what has been the impact of the changes?

Bynemanger received his final order from the UK on 18 December and was sent to him on 1 January before the new rules came into force. It is unknown at this time what he will do after leaving the post.

We run e-K, Mers Daily, selling a selection of great food from France, Europe and around the world. About 20% of our orders come from outside France.

The UK market is not central to our business, but UK customers were looking for these products and were happy to find them on our website.

Even in November and December it was kind of unclear what would happen with Brexit and what the rules would be. Now we have heard about the new procedure of sending parcels to the UK but it is not very clear yet.

We still deal with some English manufacturers and sell products from England and the UK on our website. And customers in England are calling to say: “I was ordering this product on your website, where can I find it?”

It would be a pleasure to resume sales in the UK but we need to give more time to better understand the changes and costs involved. Our question is whether all of these solutions are applicable to small businesses with the UK?

From my point of view it is difficult to get an opinion on Brexit: everyone will adjust and adapt. I just regret that we had this free market and it was so easy to do business all over Europe, and now it’s even harder.

The company was founded about three years ago and has continued to sell to the UK since Brexit.

We do very small business but 20% of our exports go to the UK.

The biggest practical thing is the confusion among customers. Many people do not understand how the system works: people think that if they order more than 135 dl they do not have to pay taxes, then we have to explain that you have to do as much as you buy yourself.

With purchases over 5 135, the customer is liable to pay VAT once the product arrives in the UK.

Nowadays people expect free shipping through online shopping, but with Brexit it is quite expensive and has to pay the cost. When you use the courier service, they will have to make a customs declaration and it will be added at a cost of 5 (£ 4.30) for each package.

I don’t know yet how complicated it is to declare a tax on the UK and how much work it is. Luckily a large portion of our UK sales pass through ETC, the Marketplace and there they add UK VAT to the top of the price.

But the biggest issue for us is that we have an account: it is one more country where we have to check all the taxes and get the right amount for the Finnish tax authorities. In that sense it’s a bit of a chore but otherwise it’s been pretty good, so we didn’t think of selling it to the UK – at least for the moment.

The company faced a month-long delay but deliveries to its suppliers in the UK have now returned to normal.

I think the UK is the fourth or fifth largest country we work with.

We managed to send some stock to our distributors in the UK and Ireland before Brexit, then we had about a month when we were unable to send the delivery.

We had to wait for the VAT number to make sure everything in our system was OK for the new customs regulations, but we have the company to help make it right.

Our distributors in the UK were able to manage contact with customers, but the effect was not as bad as it is in the middle of the season and due to the UK lockdown.

We are now able to deliver across the UK.

The company has stopped selling directly to hundreds of individual customers in the UK due to the VAT rule.

We thought about getting a VAT code to be able to send small items to the UK but it’s a lot of work. So we can’t send private customers in the UK if the order is below 5 135.

I have some business-to-business customers and they are not affected, but all the small customers are gone. It’s like 400-500 UK customers here that we can’t serve more, so it’s causing damage here.

5 135 On orders above, it is more expensive for all UK customers as they have to pay a customs charge and some fees: for example, DHL. Charges a fixed fee of € 12 per parcel.

I can sell to UK private customers through platforms like Etsy and eBay – then have to collect UK taxes on the platform. But you have to pay an initial fee, which costs money. We have a thing like 10,000 things so we have to pay a fee 10,000 times, and this is something we don’t want to do. So consumers can’t buy everything.

We also need to update our shop online shop system to cover the VAT system and UK shipping costs, which cost several thousand euros. This is the only country in the world that manages taxes in this way and that is the main problem. It’s a personal thing done by the UK and nowhere else in the world.

The company launched shortly before the UK’s first lockdown in 2020 but has now postponed deliveries to Northern Ireland and Europe.

We are still developing as a business, but it has just stopped.

The idea was to start exporting more: we know customers are there and we get a lot of inquiries. But that’s something we’ll put on the burn burner until things get easier or clearer.

We have been advised by couriers that they will no longer take food to Northern Ireland.

So with Europe, we are having a lot of issues with the order because it involves a lot of paperwork. You will need to provide details of each product in the order – sometimes our order has anything from 50 to 100 items and it takes a lot of time.

We’re just a small business so don’t deserve a headache.

We used to import ourselves from wholesalers in Europe, but now we have to use companies here in the UK. We have a supplier in Germany now using a customs broker and its price is added to each delivery, so now we are not worth importing from them – I think they are adding on top of the delivery charge and an additional 200 200 and production costs.

Our margins have been cut in about half because we have to pay intermediaries before we can import and save. Unfortunately we have to pass on the extra cost to the customers.

We are only seven weeks into Brexit and prices have risen, but it is difficult to say how this will affect us in the long run. I think there needs to be a lot more guidance for small businesses like ours.