January 27, 2021

Global trade post Brexit: the TecEx solution

BREXIT COMPLEXITIES

With Brexit now implemented and Free Trade between the United Kingdom (UK) and European Union (EU) a thing of the past, many companies have had to restructure how they do business. Pre-Brexit statistics reveal approximately 48% of shipments out of the UK are headed to the EU, while 54% of those arriving in the UK originated from the EU. Despite this prevalence of trade between the EU and the UK, all the recent changes in legislation are making these kinds of transactions increasingly difficult. The ever-growing climate of confusion and frustration is clear.

BREXIT CONSEQUENCES

Complexity was introduced to the process of exporting from Europe during 2019 when officials announced that from 1 December 2019 only EU-established entities were able to act as an exporter out of the EU. Companies were given until 1 April 2020 to adjust and, where necessary, register an entity. This is a time consuming and expensive process at the best of times, but with Covid-19 shutting down most of the world this process has been delayed even further. As a result, many international companies are being forced to seek alternative solutions. A significant number of the companies affected have turned to TecEx to act as the Exporter of Record (EOR) on their behalf, finding great value in our EOR, Importer of Record (IOR), and compliance services. So much so in fact that they abandoned their plans to register EU entities and settled on TecEx as a permanent solution.

Now enter Brexit – and with it the end of Free Trade between the EU and the UK. This has had far-reaching consequences, such as:

  • Companies registered in the EU with export operations out of the UK are no longer able to act as an exporter from the UK and;
  • Previously simple transactions between the UK and EU, which may have required some declarations, are now a major ordeal.

As the piles of new trade legislation have become common practice, companies are now being required to obtain lists of licenses and permits for even the simplest of shipments. These licenses are extremely hard to come by and require extensive legal counsel to obtain. Certain licenses also have long lead times, such as the Single Individual Export License (SIEL) which can take around 4-6 weeks in approval time. This is just one of many compliance requirements that those wanting to export out of the UK are required to obtain for every shipment – that is, of course, assuming they have a UK registered entity. Even with a UK registered entity, exporting of goods requires extensive due diligence around the goods and destinations. This includes detailed records of the shipment which require annual submission and need to be kept for auditing purposes. Using TecEx eliminates this requirement as we perform the submissions on our client’s behalf and maintain all documentation in case of an audit.

These new trade rules have also added complexity to the process of calculating taxes and duties. Accurately calculating these taxes and duties takes years of experience, requiring accurate identification of HS codes and expert knowledge of trade relations between origin and destination countries. A miscalculation in this department can be catastrophic in terms of cost. Top-up invoices due to miscalculated taxes can sour client relationships or tip budgets over the edge into loss-making deals, while a missed compliance document could result in lengthy delays at customs.

Unfortunately, despite reassurance and governments’ best effort to facilitate a smooth transition, the situation does not look good for companies. Luckily for those dealing in IT and Medical Equipment, there is a simple solution.

THE TECEX BREXIT SOLUTION

TecEx has years of experience and a proven track record in facilitating complex and high value transactions for many UK & European companies. With the ability to act as both Importer of Record (IOR) and Exporter of Record (EOR) in the UK and EU, TecEx is an ideal partner for those struggling to navigate the maze that is Post-Brexit trade. One of the major benefits that TecEx offers is our OIEL, an open export license that allows us to act as the exporter out of the UK. This license means our clients do not have to apply for a SIEL, drastically cutting lead time for shipments by weeks. This license is exceptionally difficult to obtain and places significant risk and burden on the holder. So much so that several of our UK based clients have been making use of our Exporter services, despite holding their own OIEL.

We are also able to offer EOR out of the EU for those UK registered entities who were previously exporting directly out of the EU but are now unable to do so after Brexit. Using TecEx’s EOR service means that our clients, in any location, can export out of Europe with significantly less cost and risk.

In addition to being able to act as IOR in both the EU and the UK, TecEx can act as IOR in over 200 other destinations around the globe. We are able to facilitate imports into any European country using our already established processes. This saves UK clients from having to research the individual compliance regulations in each EU Member State, which differ in subtle but significant ways. By acting as the IOR, TecEx also takes on the significant legal and financial risks associated with the importing process.

Our full DDP service includes:

  • Handling of all compliance needs,
  • Utilise our expert knowledge of IT compliance requirements,
  • The upfront payment of duties and taxes on your behalf, and
  • Handling of last-mile delivery, as well as international logistics if requested.

Our years of research and practical experience in the industry have enabled us to develop a system which accurately calculates duties and taxes, as well as lead times. This allows us to provide our clients with peace of mind and confidence in the efficiency of our services.

BELOW IS A CASE STUDY SHOWING OUR SERVICES IN ACTION

Our client, Company X, is an IT reseller located in the UK. Prior to Brexit our client had relied heavily on deals which involved sending hardware to the EU branches of their UK clients. Free trade had meant that our client could fulfil these orders without having to worry about import and export processes. With very limited knowledge on these processes our client had struggled to fulfil their orders and had a number of shipments getting stuck at customs. Their clients were starting to become frustrated and threatened to take their business elsewhere. It was at this point that they approached TecEx for assistance with export and import services for a high value rollout to several destinations within Germany.

HOW DID TECEX MANAGE THIS SHIPMENT?

TecEx was able to export the equipment on behalf of the client using our already established licenses, negating the need for the client to apply for a SIEL. This included the filing of the necessary documentation, correct classification of the goods, completing the appropriate declarations, obtaining and submitting the correct export licenses. On arrival in Germany TecEx quickly and easily cleared the goods, acted as IOR, paid all duties and taxes on behalf of the client, all within the accurately predicted lead times presented to the client upon quoting. In this case, TecEx oversaw the entire process from pickup at the manufacturer to last-mile delivery at all the addresses listed. The client was provided with updates from their dedicated TecEx team, ensuring they knew where their package was at every point in the journey.

Since this initial shipment, the client has decided to use TecEx’s services for all their EU business. The client’s business is growing faster than ever as they leverage TecEx’s unique global import & export capabilities to win new opportunities with the absolute confidence that TecEx will deliver on our promises. Our global influence and comprehensive solutions mean that this client is even expanding their reach beyond the EU.

In conclusion, the last few months have been challenging for the thousands of companies affected by both the changes to the exporter definition and Brexit. The combination of these two bits of legislation has resulted in many challenges and will drain companies in both the EU and UK of resources, monetary and human. However, TecEx is able to offer a solution to all Tech and Medical equipment companies’ trade concerns. With both IOR and EOR capabilities for the UK and EU, and a full DDP solution, TecEx offers a reliable, tried and tested expert solution for all of those struggling to navigate the changed world of trade in Europe.

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