Brexit and E-commerce: The Basics

The final stages of the Brexit negotiations may seem like a never-ending saga, but the process is underway, and we are currently in a transition period which finishes at the end of this year. And there will be new rules relating to online activities including e-commerce in the European Economic Area (EEA) from 1 January 2021.

In order to have a clear picture of how or if this is going to affect the way in which you do business, it is necessary to provide some background information.

The Brexit vote referendum on 23 June 2016 resulted in the UK public voting to leave the EU. Brexit is actually the unofficial name for the United Kingdom’s departure from the EU. The withdrawal became official and a transition period has been in effect. Currently, the final details of the process are being negotiated.

One of the main reasons given by voters for wanting to leave was the need for greater independence particularly around decisions relating to trade and regulations.

Brexit is significant for e-commerce in the UK because it is a powerhouse for e-commerce in the EU. The UK is the EU’s leading e-commerce market with more online shoppers than anywhere else in the EU. Therefore, this decision will have an impact on the way in which sellers and customers interact online.

There is a great deal of uncertainty around the impact on business and it will depend on the final outcome of the negotiations. However, what is certain is that there will be an impact on e-commerce in general due to the focus on the movement of goods to and from EU countries.

After Brexit there will be more customs as Britain will operate outside of the EU’s single market, this means that e-commerce businesses will need to consider there being stricter customs regulations for parcels entering and leaving both the UK and EU. There could even be products that are restricted or even prohibited.

Along with stricter customs controls is the potential for longer shipping and transit times.

It is possible that VAT laws will change which will have an impact on prices and the VAT refund system that in place.

As previously mentioned, the final details are still being negotiated but if you trade internationally or have international suppliers you may need to consult a specialist to see whether your online processes are on track for the new year. Those who have online stores which automate actions relating to the international transaction need to be especially careful. If you trade domestically and source products domestically then it will have a very limited impact on your sales process.

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