BREXIT meets online trading

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BREXIT meets online trading

Tuesday, 5 March, 2019

The imminent withdrawal of Great Britain from the EU will have significant consequences for Austrian online shoppers.

While Great Britain was a member of the European Union, the rule of the Customs Union applied to every online order from Great Britain by Austrian buyers. Therefore, no customs duties applied to purchases from the United Kingdom.

With the forthcoming withdrawal of Great Britain from the European Union, the UK’s status within Europe is changing to a third country. Thus the European Union will treat the United Kingdom like third countries such as China or the United States. As a rule, goods imported into the EU from the United Kingdom are subject to customs tariffs starting at € 150,-. At present, Great Britain has not negotiated any customs agreement with the European Union at all, and therefore the customs regulations applicable under the WTO must be applied. Every single purchase on the Internet with a value of more than € 150,- will therefore have to be declared by the Austrian buyer and the customs duties can make the purchased goods considerably more expensive. In addition to the applicable tariffs on all items with an equivalent value of € 22,- additional import VAT must be paid. For Austrian customers the usual import sales tax is 20% of the value of goods and is automatically deducted by most online retailers and already taken into account in the pricing.

The British online retailers have already come under pressure, as the example of the online clothing line ASOS shows. Within a few days after the voting on the Brexit plan the shares of the London fashion retailer ASOS crashed by more than 50%. The fashion retailer Topshop is likely to experience similar issues, exporting from London to more than a hundred countries and calling itself a digital market leader with 4.5 million customers on the Internet.

In addition to customs issues, UK online retailers are still subject to a large number of regulations such as the right of withdrawal and the right to return goods under certain deadlines. These rights to revoke purchases made on the Internet are now harmonized in most EU countries. The UK's exit from the EU requires these regimes to be renegotiated by UK online retailers. Overall, it is to be expected that the British online trade will suffer massively from Brexit and that the Austrians will increasingly turn to online retailers within the EU because of the upcoming customs formalities.

Dr Christoph Kerres LLM (Georgetown)

For more legal information please contact Mr Kerres via tel +43 (1) 516 60 or e-mail office@kerres.at.

This information is provided as a public service to highlight matters of interest and does not imply an attorney-client relationship. It is not intended to constitute a full review of any subject matter, nor is it a substitute for obtaining specific legal advice from competent, independent counsel. If you would like to receive specific legal advice, please speak to your usual contact at KERRES I PARTNERS. All liability for damages arising from the information provided is explicitly excluded.