Ahead of Brexit, the business community was fearful that the UK leaving the European Union could have potentially severe economic consequences were a trade agreement not reached. However, a deal was struck on December 24, 2020, for an EU-UK Trade and Cooperation Agreement (TCA).
The arrangement is a boon for Irish businesses, both for those looking to do business in or with the UK, and those primed to inherit the new business from their UK competitors.
The Trade and Cooperation Agreement
Under the Trade and Cooperation Agreement, goods that are deemed to "originate" in either the UK or the European Union face no tariffs and no quotas in the other state. In this respect, free trade very much remains between the European Union and the UK, despite Brexit.
However, to benefit from these relaxed tax and non-tax barriers, the goods must comply with Rules of Origin. These rules — common to such free trade agreements — are intended to prevent businesses from third countries from inappropriately accessing the treaty benefits.
To benefit from the perks of the TCA, goods must generally be wholly obtained in the country or bloc and have been produced there or have undergone a certain degree of processing there.
If an export fails to satisfy these rules, World Trade Organization-level rules and tariffs apply.
With any new system, there's bound to be a learning curve. Businesses are presently having to contend with increased customs declarations, as well as new regulatory, IT, and data management requirements.
However, various supports have been put in place by both sides – including allowing businesses to delay furnishing customs paperwork, typically until the end of June 2021, and, in some cases, to delay paying cross-border taxes.
Businesses can benefit from eased procedures if they obtain Authorised Economic Operator status, where they are considered trustworthy by local authorities, or if they use trusted third parties such as freight forwarders to act on their behalf.
As previously stated, in addition to the challenges that have come about as a result of the changed relationship between the European Union and the UK, there are also opportunities presented by the trade agreement. As with many opportunities, those acting most deftly will reap the greatest rewards.
Our experts are well versed in helping businesses through the changes and can assist your business in taking advantage.
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