21 January 2021

Here you will find more precise questions asked to us by some of our members, to get an understanding of the concrete implications of Brexit on Franco-British business.

Question

We are a French company that manufactures and markets clothing. Some of our professional customers (multi-brand shops) are based in the UK. We sell in EXW.

  • Does our EORI number have to appear on commercial documents (orders, delivery notes, invoices)?
  • Does the EORI number of the recipient and customer in the UK have to appear on commercial documents (orders, delivery notes, invoices)? Most of our garments are manufactured in third countries, mainly in the EU (mainly China). We import these finished products into France before exporting them to the UK.
  • As our goods do not undergo any modification in France (or warehousing), are these products subject to the UK Global Tariff (12% in our case), or do they benefit from an exemption from customs duties for preferential origin?

Answer

In the first place the incoterm EXW is to be banned. Customs obligations are grouped in articles A7 and B7 of each Incoterms®2020 rule.
In all incoterms (except EXW – DDP) :

  • It is the seller who is responsible for export customs clearance.
  • The buyer is contractually responsible for import customs clearance.

Except in the case of Incoterms EXW & DDP, a French company trading with the UK does not have to deal with customs formalities.

Since 2010 he has been an advisor for internal operations in the same country because ..:

  • EXW: the buyer is in charge of the exportation
  • DDP: the seller is in charge of the import

In the case of an EXW, you are in charge of customs on the UK side and are liable for duties and taxes, preferably a DAP or DPU.

The sender’s EORI number must be on your invoice and the recipient’s EORI number transmitted to your DER for the issuance of the SAD ENS and EAD. Then your carrier will generate the Brexit IS which will allow him to access a UK.

Finally, your importer will contact his broker to carry out a final import, he will then have to pay the customs duties (only in the case of a DAP or DPU, otherwise you will have to have the import carried out in the UK and pay duties and UK VAT).

Concerning duties and taxes you are subject to according to your HS Code 12% tax.

As the rule of origin does not change, a Chinese product even in France remains a Chinese product.

The agreement allows, under certain conditions, to benefit from an exemption from customs duties for all trade between the UK and the EU, whatever the products.

CONDITIONS TO BE MET TO BENEFIT FROM THE AGREEMENT
The product must originate in one of the Parties to the Agreement.
It may be considered as originating in one of the Parties:

  • if it is wholly obtained there;
  • if it is manufactured in a Party exclusively from materials originating in that Party;
  • if it is manufactured in a Party from non-originating materials, provided that these materials comply with the rules in the list in Annex 2 “Origin” of the Agreement (pages 415 to 485).

When reading the treatment carried out on your products you will not fit in this case.

To avoid having to pay duty and tax twice, we advise you to find a system of storage under customs.

Finally, in order to export, you must urgently find an RDE, this operator is in charge of making the customs declarations.

RECOMMENDED EXPERTS and members of the Chamber:
Stern Group
UPS