Page 10 - Horizon Han22

Our focus now shifts to facilitating solutions where the goods are purchased and sold within the EU. Clearly there are a number of different ways of doing this and the key is to implement the right structures in the right countries to operate your supply chains efficiently. To do this requires a clear understanding of your local obligations in the territories where you operate. Logistics should drive this, but there are VAT considerations that should be considered as part of the process.
We’ll share experience in terms of how businesses are meeting these challenges and some of the different fulfilment options that commonly being used.
Fulfilment options
Clearly, one of the key supply chain issues is speed to market. How quickly can you fulfil an order?
The hard border between the UK and EU has caused delays. In response to this, many businesses have explored the options around maintaining EU stocks. This can involve third party logistics (3PL) arrangements, third party warehousing and at its most involved, setting up EU subsidiaries to operate EU warehouses.
Aside from speed to market, there are other real benefits to maintaining an EU stock where you import goods from the Rest of World.
Let us use China as an example here. In situations where you can directly import goods into EU from China, rather than
import into the UK to then forward to the EU, you remove any potential issues around ‘double dip’ customs duties. Customs duty would only be payable in the EU and no customs duty costs would be incurred in the UK. You can also import containers or pallets, rather than individual packages which can significantly reduce handling costs and customs clearance fees.
Third Party Logistics (3PL) Arrangements
3PL arrangements provide an outsourced logistics and distribution solution, which can include transportation, clearance, warehousing, picking and packing, forwarding services. The 3PL providers will also often act as a limited fiscal representative (Netherlands) or fiscal representative (Belgium) to facilitate VAT and customs duty compliance in the respective member state.
In my view, where you don’t have a significant presence in Europe, this provides a neat end to end solution and a good deal of flexibility in terms of managing your EU VAT position. A couple of caveats; I am not saying it is a cheap solution (that would be for you to decide) and I am aware (from experience) that limited fiscal representatives may refuse to facilitate/report things like EU triangulation transactions. Where you have a direct EU VAT registration in a member state, the EU triangulation simplification can be used to facilitate buying/selling arrangements where you purchase in a second member state and sell/deliver directly to a third member state.
Our clients have primarily used 3PL solutions down the west coast of the EU; Netherlands, Belgium and France. Germany has also been
Horizon - Taking your international trade further.
an option, although I have mixed views on Germany (personal opinion which I will expand on below).
The approach of the tax authorities is a key consideration. As I said before, logistics is the overriding consideration, but ease of customs clearance, cash flow and tax
compliance are also front of mind.
In my view, the Netherlands is normally the most pragmatic tax authority to deal with. It also has a long and well-established reputation for logistics centred around Rotterdam and Amsterdam. Belgium works, we have worked with 3PL providers centred around Port of Antwerp. France can also be the right solution if you are supplying from the UK through the Channel Tunnel or Port of Dover (and others).
Germany doesn’t feel like the most immediate point of entry into the EU and recent experiences of the time taken to process DE VAT registrations and the requirements for Customs (Indirect) representation in Germany can make clearing goods in Germany costly and time consuming. We have also had significant differences of opinion with Indirect Representatives in terms of the method of valuation to be used for clearing goods. My cynical thoughts are that this could have more to do with managing their own
10. Haines Watts
Andrew Needham, VAT Partner at Haines Watts, discusses the post-Brexit landscape when it comes to supply chains and trading with the EU.
Horizon issue 2.indd 10 14/12/2022 14:48:58