If you trade with the United Kingdom post-Brexit, the relevant rules of trade will likely change. It is important to consider and plan for the VAT and Customs implications on your business arising from the various methods by which the UK can leave the EU.
It is likely that customs duties will become a reality for those trading and importing from the United Kingdom.
The UK intends to negotiate a free trade agreement with the EU, but this is unlikely in the two-year negotiation period after Article 50 was triggered and would hopefully be underway in the transition period after the UK leaves the EU and which is currently likely to be 31 October 2019.
Certain imports into Ireland will be particularly affected, such as the agricultural and food sectors, where duties tend to be much higher e.g. Cheddar cheese 55%.Beef 40%.
Planning consideration would need to be given to available customs reliefs, to cut such costs.
VAT and Customs implications
There will likely be significant VAT considerations which must not be overlooked in the event that the UK become a third country for trading purposes to the EU 27 block.
The implementation of VAT at point of entry for goods from the UK means that Irish businesses will have to bear the cash flow cost of VAT on goods coming into Ireland. While import VAT is recoverable, there could be a significant cash flow burden as these amounts will need to be funded to have goods released into circulation.
Contracts should be reviewed to assess their impact from a customs perspective, and to determine which party to the contract is responsible for fulfilling customs obligations. This would include the payment of applicable customs duty and import VAT.
Do you foresee your business or supply chain interacting with the UK post Brexit?
If yes, please contact us to discuss Tax planning.