Brexit: customs duty considerations

25 July 2016

Once the UK’s withdrawal has been confirmed, the UK will no longer be part of the EU’s Customs Union. Therefore, dependent on the withdrawal terms and conditions, customs duties could apply to imports from the UK, making it a more costly and subsequently less attractive option for EU companies and consumers sourcing goods from UK companies.

In that scenario it is likely that the UK Government would extend the current duty tariffs to imports from the EU, adding costs for UK companies reliant on raw material and finished goods from EU suppliers.

Further practical barriers would also likely take effect as all EU goods would need to be customs cleared (first exported, then imported, in both directions), adding time, complexity and cost to supply chains.

Businesses in these sectors will need to consider:

  • Are sales within the EU large enough to justify moving manufacturing and operations to an EU site to avoid a customs duty hit on margins?
  • What customs tariff applies to the goods sold? Can working capital be increased to deal with this additional outright cost charged on import into the EU?
  • For current EU imports, can suppliers be changed easily? If not, do prices of goods need to be increased?
  • For importing materials or unfinished goods in from outside the EU, is there a need for parallel inbound warehouses (one EU based and one UK based)?

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If you have any immediate Brexit questions please email us or send enquiry as we are interested in discussing this with you.

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