The impact of Brexit on Belgium businesses
On the 31st of December 2020 the transition period for the United Kingdom leaving the European Union officially ended. With this comes change for many businesses and entrepreneurs in Belgium on how they trade with the UK.
Belgium products are highly sought after across the channel. In 2019, Belgium exported €27.88 billion worth of goods to the UK with the market accounting for nearly 9% of our exports. Many entrepreneurs and small businesses will of course want to continue trading with the country. But to do so, they’ll have to adapt to new rules and processes to minimise the impact on their business.
With many of these changes still not clear, it’s difficult to know exactly what will change for you and your business. To help, Aion bank has put together a list of five of the key changes that have come into effect this new year and what steps businesses need to take to continue operating as usual.
Buying and selling goods
The situation at the border has changed, and new requirements for imports and exports between the UK and Belgium have been imposed. Have a conversation with your trading partners across the channel to coordinate responsibilities and ensure you have the correct documents for the type of goods you trade, ensuring you tick all the boxes on the necessary formality list.
Starting the first of January, all European countries have to file specific custom forms for carrying, transporting, importing and exporting goods between the EU and the UK. When not being in full compliance with these formalities, products won’t be able to cross.
The key is to be fully informed about the rules about your specific products and have strong communication with partners on the other side of the border and anticipate inevitable delays on import and export.
Selling services
As well as for the sale of goods, new rules and regulations around selling services in the United Kingdom have come into effect.
This may be applicable to you if: you have a branch or subsidiary in the UK, your business is part of a UK service sector, you plan to merge your business with a British one, whenever you or your employees will need to travel to the UK for business or if you or your employees provide services in a regulated profession in the UK.
If you or an employee needs to travel to the UK, make sure your passport is valid for at least another six months, has sufficient blank pages, possesses the correct visa if needed and that you have filed all the relevant paperwork to be allowed to cross the channel.
Paying VAT
There is a special VAT system for those trading amongst European member states. As the United Kingdom will no longer be one of those, the way you file and pay your taxes will also change.
Ensure you understand the new rules for the import VAT you will be charged for shipments to UK buyers, and vice versa. You will be subject to pay import VAT on shipments to UK buyers if you sells goods on the UK market on products worth £135 (€150) or less, if you sell goods in packages valued at more than £135 (€150), the import VAT and customs duties must be paid by the buyer in the United Kingdom and collected by the package manager.
One very important element that is necessary to continue importing goods into the UK will be to have a EORI number (Economic Operator Registration and Identification number). This is an unique identification number all businesses must have to file a customs declaration. Ensure you apply for this on time, as it will be mandatory for any type of import at the start of the new year. It can take up to a week to apply for and receive a EORI number.
You’ll not usually need an EORI number if you only provide services rather than selling goods. However, if you’re unsure you can ask your post or parcel service and they’ll tell you if you need one.
Personal information and data protection laws
Your company may need to take some actions to be able to continue sharing personal data with companies or other organisations in the UK. Be prepared for changes around laws regarding data protection and data transfers. This can be relevant to, for example, social media platforms, websites, payroll systems and smartphone apps.
Currently, the storing and transferring of data of both UK individuals and companies falls under the European regulations (GDPR), but this is likely to get a lot stricter and more complicated from January onwards. Not complying with these regulations could lead to your business being fined a penalty worth up to 4% of your annual global turnover, depending on the level of offence.
Currently the UK is planning to incorporate GDPR into its own national laws, however, it’s unclear how this might differ from the current EU framework. Exchanging personal data freely can only take place if the data protection rules in the non-EU country are deemed a high enough standard in line with the EU’s strict GDPR rules. Gaining this recognition can be time consuming.
Impact on people
Not only does the movement of goods and services change at the start of 2021, the same will apply to people wanting to cross the border. Free movement comes to an end, for both people looking to work abroad or just to get across the channel for a visit.
This can reflect back onto Belgian businesses in two ways. You might need a visa to visit the UK on a business trip and a UK citizen employed in Belgium could need a work permit. On estimate, nearly 25,000 Brits currently live and work in Belgium.
Now, UK citizens in Belgium will need to apply for a new residency card and even a working permit whilst those travelling to the UK will need a passport, rather than just an ID card, to enter the country.
Conclusion
Preparation and keeping up to date with new developments on what changes apply to you and your business are key to navigating this transition.
The first big effects of the UK leaving the union are already becoming apparent, but with many things still uncertain and with no deal yet to be struck, it’s important to keep yourself informed and take the steps as they come.