[krona]

> British businesses that export to the continent are being encouraged by government trade advisers to set up separate companies inside the EU

The DIT is not advising companies to move to the EU. I'm no expert but VAT has to be paid somewhere and now the process (especially given changes being introduced separately of brexit for e-commerce) is confusing and unexpected for small businesses. The way to deal with this is to set up a company (probably in Ireland) to make accounting easier and obviously avoid tax issues at the border.

That's only part of the problem for goods but seems to be what the article is mostly referring to.

[rndmio]

It's not just about VAT, but the other frictions of the new border. Direct selling from the UK is now much more awkward and the recommendation to have a subsidiary in the EU that the UK business ships to and then distributes from there means only one lot of paperwork to get the products into the EU. It'll still impact UK businesses on price or profitability. "Project fear" has pretty much been proven fact, for most businesses there is no upside to brexit, only costs.

[libertine]

VAT is pretty straight forward, it has to be collected on sale (so the sale price must reflect the price + VAT for that country), and then given back to the country (periodically, which usually is every 3 months).

What was happening was that collection was being done by the customs, and only a small fraction of the goods were being flagged for not having VAT, then they had to collect it, and then proceed to return it. This puts an extra layer of work on customs, and many goods are sold at a price that can't be matched by EU businesses because they have to collect VAT.

So EU now demands businesses that want to do business in the EU to do what every EU business does: collect VAT on sale and return it.

[p_l]

A friend recently tried to sell something small to UK, after January 1st 2021.

The end result is that the cost of doing business went so far out of scope he decided to simply stop any sales to UK, because UK wanted him to pay register for VAT and pay it. This is much more complicated than it sounds, not only because of the registration requirements.

Simply put, just figuring out how the frak do we note the UK VAT on the invoice started to sound more expensive than the sales lost by just ignoring UK. Because there's no space in VAT system to put VAT twice, or at least no clear guidance could be achieved. And yes, he would need to put in VAT twice - first the 0% export declaration to Polish tax office, then somehow add the UK vat for UK, then figure out how to declare it so that the UK VAT collected isn't taxed locally as income.

[diogofranco]

And in the other direction as well. I live in the EU and used to buy clothing from a UK e-store which would trivially arrive a few days later. This year, my 35eur shirt got stuck in customs and I had to pay another 40 to retrieve it (vat + customs fee). That was the last time I'll be buying online from UK.

[libertine]

I understand what you're saying, but that's basically bureaucracy and the billing systems that we use - which I agree can be hard to figure out, and a lot of times doesn't seem to make sense.

In my country if you ask the majority of accountants about some of these matters, they don't know how to reply to you, or don't do it because they're afraid of getting it wrong. If you call the Finances 3 times, you might get 3 different answers.

It's a mess.

[p_l]

Thing is, it's not straightforward, especially with UK jumping head first with little warning into moving VAT payments from logical place (customs) to illogical place (foreign seller).

And the guidance on HMRC page is so convoluted that it's hard to figure out if there's an exemption or not (hint: there's none, you're fucked, and welcome to trying to figure the declaration differences between sub-135 GBP and above it)

[libertine]

>Thing is, it's not straightforward, especially with UK jumping head first with little warning into moving VAT payments from logical place (customs) to illogical place (foreign seller).

This will be the protocol for EU as well, but it was delayed to June 2021 if I'm not mistaken!

But I'm with you, information about such matters is so detached from the "regular" citizen it's weird how in 2021 things aren't straight forward. Like people give shit to Terms & Services of apps, social networks, etc, because they're are ridiculously lengthy and with legal/uncommon language, but a lot of government documentation and laws are written the same way.

[p_l]

Yes, I know this will be protocol too - I don't even have any expectations Poland will handle it better too, but that's a different topic. But that's why I mentioned "Jumping head first". Because that's what they effectively did.

[terhechte]

But it also says: > This will mean laying off a small number of staff here and taking on people in the Netherlands.

And given that the EU market is bigger, that number might increase further as time goes on.

[iso1210]

I'm sure the UK staff will work for sovereignty instead of money

[throwaway45349]

EU market may be big, but the UK is too valuable to just give up on entirely.

[libertine]

The EU didn't want to give up on UK market, it was the UK that gave up on EU, but they simply couldn't give them the same benefits every other member has just because it is valuable - that would defeat the perks of being a EU member.

I can give you an example, a lot of people I know that did ecommerce and sold on PAN EU Amazon used UK as a hub for imports - not anymore of course.

Maybe things will improve on customs processes because there might be a big volume of bureaucracy that wasn't there before, but it will always be a bottleneck. Such bottleneck makes sense because the EU must guarantee that the block businesses aren't being penalized by UK businesses.

[bildung]

UK represents only 18% of the post brexit EU market. The problem is that that the Uk now is a completely seperate market, so is in direct competition for attention with other non-EU markets. Why should a EU company focus on the UK when e.g. China is a much larger market and growing much faster? Or Japan? Or Brazil?

https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?location...

[brigandish]

> Why should a EU company focus on the UK when e.g. China is a much larger market and growing much faster? Or Japan? Or Brazil?

Some reasons would include China and Japan being highly protectionist and difficult markets to enter into successfully, the language barriers, but most importantly, distance.

[makomk]

Also, in practice the EU is arguably less of a single market than it appears to be on paper anyway. Different countries not only have different languages but also different regulations in a surprising number of areas, and shipping between EU states isn't particularly cheap or fast from what I've heard.

[Symbiote]

The situation wasn't perfect (or, indeed, finished) but nothing has been gained, and EU & UK consumers buying goods online, EU & UK small businesses and EU & UK large businesses are all complaining about the new restrictions on trade and flow of goods between GB and EU, and GB and NI.

I don't see a good way around the language issue -- every developed country requires most consumer products to be described in the official language(s). (I see French and Spanish on "Made in USA" things, presumably so they can be sold easily in Canada and Mexico.) Medium and large manufacturers put multiple languages on the label, either all of them (e.g. Ikea) or some of them (e.g. my toothpaste is labelled for sale in Britain, Ireland, Norway, Sweden, Finland and Denmark). Very small manufactures just stick a sticker over the default label, you see the same at the Chinese food shop and the Polish food shop -- that does increase costs.

The EU has a project to improve cross-border delivery, which I think is particularly motivated to improve the situation for individuals and small/medium businesses -- large businesses that move stuff by the lorryload aren't bothered by the borders. (e.g. "Amazon.de" has a distribution centre in Poland, and offers free delivery to Czechia, Denmark, Sweden etc if you spend €39, rather than the €29 for free delivery in Germany. Can an American business in California offer flat-rate delivery to the whole USA? I see e.g. UPS does, but I don't know if there are alternatives that undercut them for in-state or next-state delivery.)

[jlokier]

Shipping food was fast enough to stay fresh. Now it's rotting in holding stations because the process has slowed down so much.

[helij]

Nah, you heard wrong. Shipping between EU states is cheap and fast.

[greatpatton]

No the article is saying that if you want to keep doing direct sales to EU customers (retail), the only way is to use a company in the EU from where you will do the shipping.