Brexit: Britain’s exit from the EU
Now it has happened… After the British voted for Brexit in a referendum on 23 June 2016 with around 52 percent of the vote and after years of wrangling and tough struggles, Brexit took place on 01.02.2020. Brexit is an artificial word from “Britain” and “exit” and stands for an absolute novelty: after more than 40 years of membership, the British, the first country ever, to leave the European Union at the end of 31 January 2020. However, not with the feared hard cut, but within the framework of a withdrawal treaty with a transitional phase, which will initially apply until the end of 2020.
On our topic page, we explain what the content of the transitional agreement regulates and which Scenarios for the period after an agreement. We also explain that who is affected by Brexit. We will gather the most important information about Brexit for you!
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Brexit Whitepaper Series
The tough fight to leave – The Brexit timeline
- March 29, 2017:Prime Minister Theresa May submits the official withdrawal request to the EU. The two-year period for the final withdrawal is in progress.
- 19 June 2017: Start of negotiations between the EU Commission and the UK on the Withdrawal Agreement.
- September 2018: Britain adopts its own customs law, which Taxation (Cross-border Trade) Act (TCBTA). The customs aspects are based on the Union Customs Code. In the event of a no-deal Brexit the UK Customs Act will enter into force on 1 November 2019 and will apply.
- October 2018: originally planned conclusion of negotiations on a withdrawal agreement and the start of the ratification process. Without the Withdrawal Agreement, no transition period!
- 14 November 2018: the British Cabinet approves the draft Withdrawal Agreement.
- 22 November 2018: the 27 Member States receive a draft political declaration setting out the framework for future EU-UK relations for the vote on 25 November.
- 25 November 2018: EU Special Summit on the Draft Withdrawal Agreement. EU leaders have approved the Withdrawal Treaty and the Declaration on Future Relations. Parliaments on both sides can begin ratification.
- December 2018:Latest start for ratification of the Withdrawal Treaty in the British Parliament. However, a quick decision is not to be expected because of the massive resistance. At the same time, the EU will therefore also plan the no-deal scenario without a hard Brexit agreement.
- 07 December 2018: UK publishes its own tariff (WTO schedule)
- December 11, 2018: First vote in the British Parliament. No agreement has been reached.
- March 2019: Latest possibility of ratification by all instances. Such a late date is “undesirable, but technically feasible,” according to the EU Parliament.
- March 12, 2019: New vote in the British Parliament on the Withdrawal Agreement. Parliament votes again against the agreement
- 13 March 2019:Parliament votes against hard, disorderly Brexit. At the same time, a Temporary customs tariff Published.
- 14 March 2019:By a large majority, the British Parliament decides to ask for Brexit to be postponed. However, the other 27 EU Member States must agree to this. If they refuse to give their consent, the date will be retained and a hard Brexit is likely to occur.
- 22 March 2019: The 27 EU members have agreed to a dual strategy. If the British Parliament approves the negotiated withdrawal treaty, there will be a postponement of the Brexit date. If the House of Commons does not agree, there should be an extension until 12 April. The EU expects Britain to declare at the latest by then how it intends to proceed. The date is related to the European elections to be held from 23 to 26 May.
- March 29, 2019: The House of Commons is once again voting against the Withdrawal Agreement. Theresa May is asking for a further postponement of the withdrawal agreement.
- 11 April 2019: The EU grants a further deferral until 31.10.2019.
- 23 May 2019: Theresa May announces her resignation from the party leadership on 7 June. She will remain prime minister until a successor is found. Since then, the personnel carousel has been spinning.
- October 19, 2019: The vote in the House of Commons on the Withdrawal Agreement has been postponed. Prime Minister Boris Johnson must therefore ask the EU for aneerily postponement of Brexit. The British Prime Minister complied with this duty, but at the same time, in a second letter, called on EU leaders not to comply with this request.
- 31 October 2019: Withdrawal date from the EU if there is no withdrawal from Brexit or an exit agreement is signed. If the British Parliament adopts the Withdrawal Agreement earlier, the UK will step down for the first month of the following month. This “flexible extension” was discussed by EU Council President Donald Tusk. With no agreement on Brexit in the House of Commons, Prime Minister Boris Johnson has asked for an extension.
- 31 January 2020: The requested extension of the Article 50 deadline was decided by the European Council. The Council of the European Union states: “The extension will apply until 31 January 2020to increase the time it is time to ratify the Withdrawal Agreement. Withdrawal may also take place earlier , on 1 December 2019 or 1 January 2020, once the Withdrawal Agreement has been ratified by both parties.” Britain will remain a member state of the European Union until it leaves the EU, with all the rights and obligations under the EU treaties and EU law.
- 01 February 2020: In the case of the no-deal, the UK Customs Act enters into force and is applicable immediately.
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Scenario 1: Hard Brexit – Unregulated exit and trade under WTO rules
The Brexit worst case would be third country status! This no-deal scenario is something neither the EU nor the government in London wants. However, the further the withdrawal agreement is delayed, the more likely this scenario will be.
The UK is leaving the EU without new rules. This means that The United Kingdom would have the status of a third country. Customs declarations are necessary and the tariffs imposed at the World Trade Organisation (WTO) would apply. In addition, the UK loses membership of the 34 EU free trade agreements and the three customs unions with third countries, and thus also preferential access to these markets. After the UK leaves the EU, British precursors no longer qualify as Union goods. By the way, this also applies to goods already in stock!
When you do the UK business, it’s time to look at export rules for safety. EORI, customs tariff numbers, customs declarations, proofs of origin and preference calculations then play just as much a role as dual-use regulations in export control.
What does this mean for the movement of goods?
Customs & Foreign Trade
After withdrawal (or after the expiry of the transitional period within which the EU customs regime continues to apply), all deliveries of goods to or from the EU will be must be cleared for customs clearance. This also applies if the EU and GBR conclude a free trade agreement in the course of the negotiations.
Are you already making customs declarations today?
Then you can look forward to the upcoming dates relatively calmly. Britain, like other third countries such as the US or China, will then have to deal with it. Nevertheless, you should keep in mind that
whether existing permits can be adapted (e.g. extension of the country circle, processing and storage locations in GBR).
whether new customs authorisations are to be applied for, in particular authorisation for the operation of a storage warehouse on the importation of goods. Processing deadlines must be observed for the new application.
- that authorised economic operator (AEO) authorisations and other authorisations of customs simplification granted by the customs authorities in the UK are no longer valid in the European Union.
Do you only work in the European Single Market?
Then you will have to pay the appropriate information for your business with the UK in the future. Customs declarations hand over. We therefore recommend that you take appropriate customs knowledge in good time and also deal with the topics trade in goods numbers and EORI numbers or seek external support in the form of a customs agency.
Please take into account the following general notes:
- In principle, economic operators must register with the customs authorities in order to apply for an EORI number.
- The exchange of information between economic operators and customs authorities is generally carried out electronically – for the use of the German IT system ATLAS, a declaration and a certified software (e.g. from dbh) are required.
- Goods to be brought from or to the customs territory of the EU are subject to customs supervision: customs formalities must be completed, declarations and, where appropriate, additional documents must be lodged, guarantees for potential or existing Customs debts may be claimed.
- Goods to be brought into the EU are subject to customs duties on the basis of the customs tariff number.
The United Kingdom acceded to the Convention on a Common Transit Procedure (CCT) on 30 January 2019. The UK will automatically become a member of this agreement once it has left the EU to ensure that transit between the UK and the EU can continue to be carried out after Brexit.
For more information
For more information, see the EU Commission’s Pre-Brexit Communications
Prohibitions and Restrictions (Compliance)
Cross-border trade in goods with third countries is subject to separate rules on prohibitions and restrictions.
In practice, this means:
- Labelling requirements must be taken into account
- Certain goods may only be cleared at approved customs offices, such as veterinary border inspection posts. Customs overviews have already been updated accordingly.
- At customs clearance, approval and accompanying documents must be presented, e.g. pharmaceutical permits, species protection permits, declarations of conformity for machinery, licences for ozone projects such as refrigerators, etc.
- Prohibitions and authorisations in the context of export control must be taken into account
They should therefore become familiar with the examination of goods and the intended use, export control.
On the subject of import and export licences, please refer to the EU Commissionin German here .
Agriculture and Brexit
With Brexit, the agricultural sector will have special rules to protect the single market:
- Quantity limits (import quotas)
- Specific import duties
- Labelling requirements
- Market observation through import control declarations
- High control density and sampling
- Submission of special documents:
- Proof of compliance with marketing standards, e.g. certificate of conformity for fruit and vegetables
- Evidence of non-preferential origin, e.g. for wine, through the wine accompanying document
- Certificates of authenticity, e.g. for beef and poultry meat
- Traffic certificates
Origin of goods and preference calculation
Goods from the UK will be valid with withdrawal, no later than 1 January 2021 no longer than EU goods. In the calculation of originating status, non-EU goods are used as non-originating materials.
You should therefore take a close look if you use British material for your products and use existing free trade agreements with third countries such as Switzerland, Egypt, etc. The use of British raw material may be Preferential calculation lead to the loss of EU originating status and thus to the loss of the customs advantage.
Also, if you use British material for your products and only sell them in the EU, you could be affected! Since your own outgoing vendor declarations are also based on preference calculations, you may no longer be able to issuing vendor declarations or have to revoke old declarations. In the unfavourable case that your customer absolutely needs EU goods because of his own calculation, it may be that you as a supplier are no longer eligible.
Accordingly, we recommend: check now whether you are using British materials, what impact this will have on the origin of the goods and whether you may need to look for new suppliers in a timely manner.
Please note: the loss of European originating status applies to: all British Goods or materials in your warehouse regardless of the time of procurement. This means that even “old” stock, no matter how old, is no longer of European origin from the cut-off date. However, post-clearance is not necessary. In order for goods or materials purchased only after the Brexit deadline to be treated as non-EU goods, a corresponding arrangement would be needed in a transitional agreement.
If materials have already been processed and the origin of the manufactured goods is EU or Germany, this will continue to exist with Brexit. So you don’t have to recalculate goods already made with British materials.
By the way: binding tariff and origin information on British goods is also available to you from the cut-off date.
For further information from the EU on this topic on German, see this EU Commission PDF
We recommend the Chamber of Commerce and Industry’s free “Are you ready for Brexit” checklist, which lists 18 topics (e.g. customs duties, contracts, taxes, transport) that companies should consider in principle in preparation for Brexit.
Scenario 2: Brexit with transition period and follow-up agreements
If the exit negotiations reach a result in time, the transition period would begin on 1 November, during which nothing will change for businesses until 31 December 2020. A one-off extension until 31.12.2022 is foreseen.
The Withdrawal Agreement provides that the UK will continue to comply with all EU rules during the transition period. The UK thus remains part of the customs union and the single market. The UK remains bound by the EU’s free trade agreements and the European Court of Justice also has jurisdiction. Live animals and animal products occupy a special position: there are indeed exceptions in the room, where separate controls / requirements can also be defined during the transition phase.
This means for industry and commerce, freight forwarders and customs agencies that nothing changes and that time can be used to prepare for the final Brexit. However, the transition period will only enter into force within the framework of a comprehensive withdrawal agreement. If the European Union and The United Kingdom do not reach an agreement, the idea of a transitional period will lapse.
The transition period will be followed by the UK’s membership of the customs union (comparable to the EU-Turkey situation). Northern Ireland is also to be given a special status in the EU’s single market (called a backstop). These arrangements will remain in place until lasting future relations between the EU and the UK have been negotiated.
Exactly how this looks depends on the negotiations during the transition period. The political declaration, which is currently being discussed as part of the Withdrawal Agreement, contains 26 pages of memorandums of understanding from both sides for a long-term relationship between the EU and the UK. The following objectives are defined there:
- Creation of a free trade area (comprehensive free trade agreement where appropriate)
- No customs duties, fees or quantity restrictions on goods
- Liberalisation of services well above WTO level
- Recognition of professional qualifications
- Free payment transactions
- Protection of intellectual property beyond international agreements
- Long-term security partnership
We will summarise below which scenarios are conceivable on this basis for further agreements. A comprehensive free trade agreement is currently considered the most likely option.
Scenario 3: No Brexit or Brexit exit
Not very likely, but not excluded. A new referendum and thus a withdrawal from the euasy is theoretically still possible.
Are you affected by Brexit at all?
Do you meet one or more of the following criteria?
- My company has trade relations with partners in the UK
- I have uk precursors in my supply chain
- I have existing contracts with UK contractors
- In my company there are flows of goods between the UK and another EU Member State (not necessarily Germany)
- I am a forwarding agent or ship many goods to the UK
- My company works with UK accountants
- My company regularly sends employees to the UK
- My company plans or invests in the UK
Then you are affected by Brexit and should look into the issue further. We have summarized some information on customs and foreign trade for you. The free checklist can be used to provide a wide range of assistance “Are you ready for Brexit” by the Chamber of Commerce and Industry, which covers 18 issues that you should consider and strategically assess for yourself.