Effects of the BREXIT on the calculation of preferences

Brexit Präferenzkalkulation

Despite the unexpectedly quick agreement with the UK at the end of 2020, there will be significant cuts as far as preference calculations are concerned. For example, the UK no longer benefits from the 40 valid free trade agreements negotiated by the EU on behalf of the member states. Now, one might think that this is a purely British problem. But in our globalized industry, such a far-reaching change is not without consequences for the entire economy and its production and supply chains. Many German companies are more closely linked to the British economy than one might think.

Loss of EU origin

The particular crux for preference calculation, however, is that all input materials of British origin are no longer considered EU goods.  They must therefore be treated as goods without preferential origin or as third-country goods, with all the consequences this has for costing. As a result, products manufactured in-house by German companies could also lose their EU origin if the proportion of non-preferential input materials increases accordingly.

Revocation of preference statement possibly necessary

This will necessitate a reassessment of these products and companies will have to recalculate. In the worst case, the product loses its preference after the inclusion of the UK materials. As a consequence, the companies have to revoke the preference statements they have made so far – which means a very high bureaucratic effort. 

Registered exporter REX may be necessary

For exports from the EU to the UK, any exporter can issue a declaration of origin under an EORI number, provided the value of the goods in the shipment is 6,000 euros or less. However, above this amount, the exporter must be able to provide a REX (Registered Exporter) number.
If the shipper is not REX registered, they must be informed that the consignee may not be able to claim preference unless they have “importer’s knowledge.”  The shipper then still has to confirm that the shipment is OK. 

Solution for GENESYS users

For all users of our preference calculation solution GENESYS to behave correctly with the system and their statements from 01 January 2021, we have developed a Brexit wizard with version 3.3.0.0, which automatically performs the necessary steps for customers:

  • Cleaned up address data accordingly,
  • adjusted the validity of supplier declarations accordingly and deactivated their extension if necessary,
  • set the goods ever supplied by British suppliers as well as originating goods from European suppliers with British reference to “no preference”,
  • Calculations have been re-triggered accordingly and thus
  • updated valuations are determined and
  • if necessary, revocations are created.

The wizard serves to create a uniform system status and, if necessary, to make up for missing adjustments from a manual changeover from January 2020. This means that all users can continue to operate without any concerns.

Stefan Kluge

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