Friday 18 October 2019

Explainer: Extra paperwork, taxes and return of mobile roaming fees: how 'No Deal' Brexit could affect you

 

According to Revenue, clothing bought for €173 from a popular shopping site like Asos.co.uk, would end up costing €266.23 with the new taxes and duties, and that’s before any exchange rate for sterling is applied. Stock Image
According to Revenue, clothing bought for €173 from a popular shopping site like Asos.co.uk, would end up costing €266.23 with the new taxes and duties, and that’s before any exchange rate for sterling is applied. Stock Image
Sinead Ryan

Sinead Ryan

"It looks like Brexit is getting serious, but I can't see how it will affect me personally."

It will affect everyone. Directly, if you are an exporter, importer, farmer or do business with or in the UK; indirectly if you ever travel to the UK or Northern Ireland on business or holiday, buy anything in sterling, shop online or have a UK pension.

 

What will change?

In the increasingly likely event of a no-deal Brexit, the UK acquires 'third country' status. As they are outside the EU, they revert to World Trade Organisation (WTO) rules, which carry automatic and fixed tariffs on goods; each item has its own tariff which can be very high, especially on protectionist products, which countries don't want imported. Tariffs on sugar (including confectionery), meat (up to 160pc for some frozen beef), cereals, fish and dairy are all more than 25pc. Clothing and shoes are over 10pc. And all that is assuming the UK gets a deal as a 'most favoured nation' rate.

Just handling the paperwork and goods checking will add a cost, border or no border.

In terms of energy costs, €5bn worth of coal, oil and gas is imported to Ireland, mostly from or across the UK on inter-connectors. These are complicated treaties which may have to be re-negotiated, creating added costs to consumers.

 

What about consumers?

Any items you buy online will be subject to VAT and possibly Customs duties, which will increase their price substantially. VAT is payable on anything imported from outside the EU valued at more than €22, while additional customs duty is applicable on imports over €150.

It must be collected at point of delivery by An Post, or any other delivery company, if not paid directly in the website transaction, and you cannot take possession of the goods without payment. It will be similar to buying goods now from the US or China. If you buy several sizes with the intention of returning some, you still need to pay taxes on everything and negotiate returns and refunds individually, possibly with Revenue.

The strong consumer protections which apply on returns or damaged goods won't have effect with UK retailers.

Excise duties (particularly for alcohol, perfume and tobacco) and counterveiling taxes (to protect against fraud) could also apply. As we import over 20pc of all our goods from the UK, the effect on consumer prices, never mind the hassle, will be extraordinary.

That sounds expensive.

It will be. According to Revenue, clothing bought for €173 from a popular shopping site like Asos.co.uk, would end up costing €266.23 with the new taxes and duties, and that's before any exchange rate for sterling is applied. If you're buying alcohol or tobacco, you can add a chunk of change on to that again in excise duties.

The ESRI completed a study indicating that Brexit would add between €892 and €1,360 a year to household bills.

 

Why is it so much?

VAT is 23pc in Ireland, among the highest rates in the EU. Customs duty is payable on the entire bill (including transport/postage, insurance, handling fees etc), with VAT and a handling charge for An Post added to the lot.

 

Is there any good news?

Sterling has been languishing at around €1.13 since June 2016. Considering it was as high as €1.41 in the preceding weeks, it means Irish shoppers buying goods online, or importing cars, have got great value for the past couple of years. For the first time ever, car imports passed the 100,000 mark in 2018.

In a no-deal scenario, there's every chance sterling will tank even further. Some commentators are even suggesting parity with the euro, but any drop would be short-term in nature, and will not make up for the devastating impact on the rest of the economy.

The only other good news is that both Britain and Ireland want to minimise the financial impact. Both governments have been striking deals to ensure either 'special' arrangements are in place for the maintenance of services such as the cross-Border treatment plan for surgeries and the payment of social welfare benefits.

 

What about travel?

If you drive to the UK/NI, you will need a 'green card' from your motor insurer, which is evidence of insurance to drive outside the EU.

Your European Health Insurance Card (old E111) will no longer give you access to the NHS system should you fall ill in the UK, so you'll need travel insurance. Cross-Border treatments such as eye surgeries and medicine supplies, we are told, will be maintained.

Roaming charges may again apply on your mobile phone, although some providers say they won't re-introduce them immediately. Be careful if you live near the Border, as phones are automatically set to select the nearest (but not the cheapest) provider.

Irish Independent

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