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The UK has secured a Free Trade Agreement with the EU – what does this mean for cross border trade?

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The UK and the EU have entered into a Free Trade Agreement which means that goods will be able to move to and from the UK/EU without the payment of import taxes (known as tariffs) and quotas when the Brexit Transition period ended on 31 December 2020.

However, zero tariffs will only apply where the goods being transported originate in the UK or the EU (under the rules of origin). Goods which have been transported from elsewhere (or are made up of components from elsewhere) may be subject to Customs duty depending upon the nature of the goods and any arrangements in place with the country of origin. Businesses will need to have evidence of the origin of their goods.

However, the deal has not changed the post 2020 Brexit VAT changes. Movements of goods to and from the UK are now imports and exports and businesses will need to have UK and EU EORI numbers.

Customs Declarations will still be needed along with any other import/export procedures as applicable. The UK Government had already announced a six month soft landing period, during which time, Customs declarations for UK/EU movements can be deferred to allow businesses time to adapt to the new rules.

Import VAT will still be due, but under the new rules for Postponed Import VAT accounting which were introduced on 1 January 2021, the UK will move the payment of import VAT from the time of clearance of the goods at the border to the VAT returns of UK VAT registered businesses. This will provide a significant cashflow benefit. However, not all EU countries defer the payment of import VAT in this way.

Many of the EU simplifications such as triangulation are no longer available.

Capital Gains Tax

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