Five steps for successful shipping to the EU post Brexit
February 28, 2021
Brexit has introduced many changes with shipping to the EU, and we know these adjustments have been hard to adopt. We’ve heard stories from merchants of many-weeks delays, 10X costs and vastly inconsistent charges from carriers.
Sendcloud has been working hard to help e-commerce retailers continue shipping internationally after Brexit.
Be guided by their five steps for successful shipping to the EU post Brexit.
Step 1: Make sure your business is prepared
A lot of new things have changed with Brexit. There are several additional requirements you will now need before you can ship to EU states.
And if you don’t have the following things in place, you could face delays, undelivered packages and even fines.
Apply for your EORI numbers. You need a UK EORI number and an EU EORI number for sending packages to the EU. What are EORI numbers? They are codes used for tracking and registering all customs information and activity within the EU. Customs authorities use them to identify who is importing or exporting goods. You will need to include them when you fill out your customs forms.
Register for the correct VAT. Exports to EU countries will be the same as those to non-EU countries and so they’ll be subject to import VAT in the country they’re imported into. British e-commerce stores will now have to register and account for import VAT in each country they sell to. But products can be zero-rated for UK VAT (no matter if you’re exporting goods to a consumer or business).
Research the correct HS-codes for all of your products. HS codes are essential for your customs forms, and having the codes on hand will make it quick and easy to complete the necessary forms. Make sure your codes are regularly audited for any updates (especially if your products change in any way).
Step 2: Gain Proof of Origin for Preferential Status
The rules of origin help determine the source, country or territory where an imported or exported product originates from. The origin of a product is more than just where it’s being shipped from, but it details where your product comes from, where it was made. The rules of origin are then used to identify whether goods qualify for lower or no customs duty.
If a product originates from outside the UK then it may face certain duties when importing into the EU. UK businesses need to provide evidence that their products originate - or were significantly modified - in the UK to qualify for preferential status (so zero or reduced tariff rates).
In order to gain preferential status so your customers won’t have to pay duties, you need to provide the customer evidence of the product’s origin.
You will need to check which type of proof you will need to provide as there are 4 types:
- EUR1 or EUR-MED movement certificate
- Origin declaration
- Importers knowledge
- “Generalised Scheme of Preferences form A”: used to give proof of origin for goods being imported from countries covered by the UK Generalised Scheme of Preferences.
We provide a more detailed guide on the rules of origin and preferential rates, or you can find more information on government websites.
Although Low Value Consignments (under 150 euros) are exempt from customs duties, we still advise getting acquainted with the rules of origin and what it means for your products.
Step 3: Choose your Incoterms
Incoterms give instructions to customs about who is responsible for specific elements of the shipment, particularly who is responsible for the import VAT or duties.
Incoterms answer the following questions:
- Which party is responsible for the shipping costs?
- Which party is responsible for the insurance costs?
- Which party is responsible for the import costs?
- Which party is responsible for customs clearance?
- Which party is responsible for customs clearance
- Which party is responsible for transport and where does this go?
- Which party is liable for the goods and until when?
There are 11 Incoterms you can choose from, so be sure to research the terms and make the right decision for your business. It’s also wise to check which terms are compatible with your chosen carrier and shipping method, as not all carriers will allow certain Incoterms.
With the term DDP (‘Delivered Duty Paid”), you will be able to cover the customs duty and import VAT for your customers. You will be the responsible party for paying those costs. Price your products on your website to include the tax and any possible duties (for the country you’re selling into). This requires more effort and correct calculation on your part, but it makes the buying process easier for your customers.
Instead, you can also use DAP (‘Delivered At Place’). This means you only charge the Net price for your product. The customer is responsible for the subsequent import VAT and duties. The product usually will be held by the carrier and is only released when the fees are paid.
However, in some markets, the seller is required to pay taxes. So make sure to do your research beforehand.
Step 4: Correctly fill in your commercial invoice and customs forms
If you don’t complete your customs declarations correctly, you risk delays, undelivered packages, and incorrect duties or taxes. Below we give a brief rundown of what you’ll need for each form.
Commercial invoices helps customs officials to:
- Understand the contents of the package
- Decide which duties and taxes apply
- Make sure the package meets all requirements
- Make sure the package doesn’t contain dangerous or banned items
How to fill in a commercial invoice:
- Describe the contents of your shipment. List each product separately and include the quantity, weight and commercial value of each product. The description must include information about what you are sending, what the product is made of, and what its purpose is (if needed).
- Include the correct HS code for each product.
- State the country of origin of your goods. Remember, this isn’t just where you’re shipping the product from, but where the product comes from and where it’s produced.
- Make sure to include your chosen Incoterm.
We suggest adding three commercial invoices to your shipment: one for the country you’re exporting from, one for where you’re importing to, and one inside the package for your customer.
CN22 / CN23
The CN22 or CN23 are essential customs forms for international shipments using postal services (like Royal Mail). They go alongside your commercial invoice.
Which one do you use?
- Use a CN22 for shipments that have a value of up to £270 and weigh less than 2kg.
- Use a CN23 if your package’s value is higher than £270 or weighs above 2kg.
How to fill out a CN22 or a CN23? Both forms are fairly similar, but you will need more information for a CN23.
- Indicate the purpose of the package (as an e-commerce retailer, this is generally considered “sale of goods”).
- Detail what’s in the package, including the type of product, quantity, weight, and retail value in euros (excluding VAT).
- List the HS codes and the product’s country of origin.
- Fill in the address information of the sender and receiver.
- Include your business’s VAT code and EORI number.
- State if you want the package returned if undelivered (this means you’ll incur return costs)
- Detail what’s inside the parcel, describing the contents, quantity, weight and retail value
- Include the HS codes for each product and the country of origin for the goods
Step 5: Communicate with your customers
Our final step is to ensure you communicate with your customers. The changes occurring from Brexit can have many impacts for your customers, ranging from longer delivery times, paying for import VAT, or administration charges from the carriers.
It’s best practice to openly inform your customers of all of these changes. Otherwise, these changes could come as a surprise and upset your customers. You risk them refusing to accept the package (which will then cost you money), and they also may choose not to return to you as a customer.
Everyone across Europe understands that Brexit is bringing a lot of changes: being open and upfront about the costs, longer delivery times, and admin processes to consumers may turn a few away from purchasing from your site. But it will avoid unhappy customers who will likely never return, or worse, leave you a bad review.
We can’t deny that Brexit has introduced many changes for international shipping to Europe - more than are covered in this article!
Sendcloud have created a full guide discussing the 18 steps to hassle-free international shipping after Brexit – check off each step and get Brexit-proof and ready for cross-border business.