Getting Business Brexit Ready

The UK left the EU on 31 January 2020 under the terms of the Withdrawal Agreement and we are now in a transitional period until 31 December 2020. During this time, the UK remains part of the EU Single Market and Customs Union so EU rules and regulations continue to apply. Whatever the shape of the future trading relationship with the UK post transition, trading conditions with the UK will change and businesses need to prepare for that change.

How will Brexit affect my business?

Brexit could affect your business in a number of different ways. Under EU law, businesses have different responsibilities depending on where they are situated in the supply chain, (for example, manufacturer, importer, wholesaler distributor, etc.), so you need to anticipate how Brexit will impact your business.

A first step for small businesses is to contact one of the 31 Local Enterprise Offices (LEOs) across the country.

The LEOs can help you navigate your Brexit journey and signpost you to useful Government supports available to help you get your business Brexit ready.

There are many supports available through the LEOs, Enterprise Ireland, InterTradeIreland and Skillnet Ireland, to help businesses examine their Brexit exposure, seek advice, avail of customs training and make plans to protect their business.

• Local Enterprise Offices: Brexit Supports for your Small Business
• InterTradeIreland: Brexit Advisory Service
• Enterprise Ireland: Prepare for Brexit
• Skillnet Ireland: Clear Customs

More supports to get your business Brexit Ready

Supply Chain

If you plan to continue to trade with the UK, or your supply chain is partly dependent on the UK, you need to take steps to mitigate the impact of Brexit.

How can I reduce the impact of Brexit on my supply chain?

Ask yourself, do you buy directly from a UK business or do you source your goods or services from the UK, or do you indirectly source products from a wholesaler or distributor? If so, you need to understand the risks of Brexit for your business and you can do this now by checking where your materials, stock, ingredients or any other types of goods are actually coming from or going to.

Supply chain: What can I do now?

• You should contact your UK suppliers, service providers and logistics companies, or your wholesalers and distributors, to seek assurances about the continuity of goods and services you rely on for trade.
• You should also check if your non-UK suppliers use the UK as a landbridge as there may be delays and cost implications after the transition period, such as supply, customs, tariffs and related impacts on working capital.

If you have any doubts about continuity in your supply chain you need to consider the possibility of sourcing your goods or services in Ireland or elsewhere in the EU.

Supply chain: What supports are available to me?

To help you consider these questions or assess the impact of Brexit on your supply chain there are a number of Government supports available:

• The 31 Local Enterprise Offices (LEOs) across the country run a Brexit Mentor Programme to support business owners and managers. This programme can help you to identify key Brexit exposures and develop robust strategies to address issues and maximise potential opportunities.
• InterTradeIreland (ITI) offers up to €2,250 to help you engage professional advice to get Brexit ready and a Brexit Advisory Service to help businesses with practical advice, support and information on Brexit related issues.
• Enterprise Ireland ran a series of Brexit Advisory Clinics across the country offering information and practical support to companies. Key elements of these clinics have been made available online to help businesses prepare for Brexit.
• The Brexit Loan Scheme is open for eligible businesses with up to 499 employees to innovate, change or adapt in response to Brexit-related challenges. Loan amounts range from €25,000 up to €1.5m, for terms of up to three years and a maximum interest rate of 4%. Loans up to €500,000 unsecured. This may be useful for businesses who have Brexit impacts on their cashflow (conditions apply).

More supports to get your business Brexit Ready

Customs

If you trade with the UK, you will have to comply with EU customs obligations after the transition period. Customs declarations will be required to move goods from Ireland to the UK and vice versa. Both “import” and “export” declarations will be required.

In practice, much of the customs requirements can be handled by an agent or operator moving your goods. You will however be responsible for providing your appointed agent with accurate information. Incomplete or inaccurate information will lead to delays which could cost you money.

Customs: What can I do now?

• Obtain an EORI number: If you are a trader who imports or exports goods into or out of the European Union (EU) or trades with the UK post transition period, you will need a unique EORI (Economic Operators’ Registration and Identification) number. Register with Revenue for an EORI number to continue trading with the UK after the transition period. This number is valid throughout the EU. You can register for an EORI number through the Revenue website using your Revenue Online Service (ROS) account.
• If your business moves goods through the UK, or sources supplies or components from mainland Europe via the UK landbridge, you should consider availing of the ‘Transit’ procedure to lessen customs delays and costs. Transit is a customs procedure that allows goods to be moved across international borders under customs control. A guarantee is required to secure all charges on the goods. For more information visit Revenue’s page on Transit.
• You must have security in place to cover potential or existing customs debt for certain customs procedures or facilities. This security must be in the form of a customs guarantee. A comprehensive guarantee allows you to combine all your current customs bonds and guarantees. You will need an authorisation from Revenue to use a comprehensive guarantee. For more information visit Revenue’s page on Comprehensive Guarantees.
• If you intend to customs clear and import  goods in your own name into the UK, or trade online into the UK, you will need to register for a UK EORI number with HMRC (the UK’s Revenue and Customs) and it is likely that you will also be required to VAT register in the UK.
• Consider whether you want to complete customs declarations yourself or use a third party such a customs agent or operator to do so on your behalf. Business should engage with agents/brokers and agree a “pricing schedule” for filing declarations.
• The new €20 million Customs Clearing Capacity Building Scheme ‘Ready for Customs‘, administered by Enterprise Ireland, will help SMEs involved in exporting and importing with the UK and further afield to put in place the staff, software and IT systems to be ready for new customs arrangements from 1 January 2021.
• For more detail on key customs concepts, documentation and processes you can access a 40-minute online customs insights course developed by Enterprise Ireland.
• The Local Enterprise Offices customs workshops provide businesses with a better understanding of the potential impacts, formalities and procedures when trading with the UK post transition period.
• The Skillnet Ireland Clear Customs training offers free virtual training to Customs intermediaries and to businesses who frequently trade with or through the UK.

Tariffs/Duty

After the transition period, Customs Duty will apply to the import of many goods from the UK into Ireland. Unlike VAT which is recoverable by many businesses Customs Duty is not recoverable and will represent an additional cost of import.

The rate of Duty arising on goods depends on the classification of the particular goods. All goods should have an assigned classification code.

There are specific rules which apply for valuing the import of goods for Customs purposes.

Rules of Origin are the rules by which customs and other authorities determine the source of an imported product.

In the event of a No-Deal Brexit, standard rate VAT (currently 23% for ROI) will apply to the import of many goods from the UK to Ireland.

In order to mitigate the potential cash-flow burden, the Minister for Finance proposes to introduce a legislative change to introduce a system of postponed accounting whereby importers will not pay import VAT at the point of entry but will instead account for import VAT through their bi monthly VAT return.

Tariffs/Duty: What can I do now?

• Classify the goods that you import or export, and their origin, for customs purposes. Revenue offers more information on classification.
• Consider the implications of VAT and Excise Duties on your imports, and Rules of Origin on your exports.
• Consider applying to Revenue for a VAT and Duty deferment account. This will allow you to defer the payment of VAT and Duty to the 15th day of the month following the month of import of the goods. The lead in time to obtain Revenue approval for a deferment account can be at least two months. However, Government will introduce a system of postponed accounting for all traders for a period after the transition period so businesses will not have to pay VAT at the point of import of their goods coming from the UK.
• Contact your local Chamber of Commerce who have an extensive set of resources to support businesses trading internationally. They develop and maintain Incoterms® rules which are an internationally recognised standard and are used worldwide in international and domestic contracts for the sale of goods. In addition, they provide a range of training courses in International Trade as well as the 2018 ICC Guide to Export Import. For further information see Chambers Ireland.
• Explore the extent to which available customs reliefs such as inward processing relief, Customs warehousing or procedures such as transit could apply to you.
• Review contracts with suppliers and customers and especially Incoterms. Incoterms or trade terms inform parties what to do with respect to the carriage of goods from buyer to seller, and who is responsible for export and import clearance and payment of VAT and Duties. They also explain the division of costs and risks between the parties.
• Assess what changes may be required to your ERP (Enterprise Resource Planning) or finance systems to cater for a changed VAT and Customs Duty accounting regime after the transition period.

For more information, visit Revenue > Brexit.

Certification, Regulation and Licensing

There may be many Brexit implications for your business beyond supply chain and customs impacts.

I import/produce products, components, devices, etc. which require certificates, licenses or authorisations. How will Brexit affect my business?

Certificates, licenses and authorisations are required for trade in the EU for many types of goods such as medical devices and construction products, and for services for instance in the transport sector. If you rely on certificates, licences or authorisations issued by UK authorities or bodies, these may no longer be valid in the EU post transition period.

A vast range of certification and licensing for the EU market has to date been conducted by authorities and bodies in the UK. After the transition period, UK bodies may no longer have the authority to issue certificates or licences within the EU.

Certification, Regulation and Licensing: What can I do now?

To avoid disruption and delays, you will need to take the necessary steps to ensure you are compliant with EU rules, that is, to transfer to an EU27-authorised body or authority or obtain new certificates, licences or authorisations issued by a designated EU27 body or authority.

All businesses:

• You need to check whether your current certifications, licences or authorisations will be valid post transition period.
• If you rely on UK Notified Bodies for conformity assessment certificates, these certificates will no longer be valid after the transition period. You must source an alternative Notified Body in the EU. This may involve transferring certificates to another member state or obtaining new ones altogether. You can check the EU Commission NANDO website for a list of designated EU Notified Bodies.
• The National Standards Authority of Ireland (NSAI) has prepared useful factsheets that you can consult for further information.

Businesses sourcing products from the UK:

• If your company sources products from the UK after the transition period, you will no longer be considered a distributor but instead be classified as an importer. In certain instances, this carries additional responsibilities. These may include checking whether your manufacturers have carried out the appropriate assessments, documentation and legal obligations.

Businesses importing chemicals:

• If you plan on importing chemicals from the UK after the transition period, you will need to ensure that the import of these products comply with EU regulations. The Health and Safety Authority (HSA) operates a Chemicals Helpdesk which can assist businesses with questions associated with the import of chemical products.

For more information, please see the European Commission Readiness Notice on Industrial Products (PDF, 510KB).

Currency Movement

Since the Brexit vote, the value of Sterling has depreciated approximately 13% against the Euro and is expected to remain volatile as political and economic uncertainties continue.

Currency exposures for businesses stem not only from the transaction exposure of translating Sterling sales at a weaker rate, but also from reduced competitiveness against now cheaper local UK alternatives.

Estimate potential currency exposure by identifying the extent by which any Sterling denominated revenues are not offset by Sterling costs. In particular, it is important to test the impact of 10-15% currency changes on your costs of inputs, sales prices and profitability.

In order to protect your business from financial shocks you could consider hedging; talk to your bank about hedging options. Hedging is a strategy aimed at minimising or eliminating risk, normally involving positions in two different markets, with one offsetting the other. Derivatives – futures and options – are widely used for hedging purposes because they can protect an investor against changes in the spot value of an underlying asset or currency.

For more information on managing currency exposure, visit Enterprise Ireland’s guidance and tools for managing currency exposure.

Working Capital and Financing

Most of the Brexit impacts set out here will have an impact on your working capital needs. You need to ensure that you can access additional liquidity if you need it.

Working Capital and Financing: What can I do now?

• Ensure your business has sufficient liquidity in place, including debt and revolving credit facilities to withstand potential shocks. “Revolving credit” is a credit line for a fixed sum that is automatically renewed once the whole sum (or an agreed portion) has been repaid.
• If you haven’t already done so, consider applying for a working capital loan under the Brexit Loan Scheme. Once you have a sanction in place from one of the participating banks, it will be available for draw down as soon as you need it and remains valid for a period of months.
• If you are a Microenterprise (employing less than 10 people and with turnover of less than €2 million p.a.) you can access loans of up to €25,000 from Microfinance Ireland. You can apply through the Local Enterprise Offices, or directly through Microfinance Ireland.
• Review covenant calculations and headroom to pre-empt breaches as a result of earnings and foreign exchange weakness and engage with lenders. A “covenant” is a clause in a corporate bond agreement in which the issuer makes certain promises designed to protect the bondholder. These could involve commitments on debt-equity levels, dividend payments, cashflow, etc. Sometimes called protective covenant or restrictive covenant.
• Review all relevant cashflow forecasts, consider currency assumptions and whether updating is required.

Data Protection

Transfers of Personal Data from Ireland to the UK (including Northern Ireland) in the Event of a No-Deal Brexit

Brexit will have an impact on the Data Protection obligations of Irish businesses and organisations which transfer Personal Data to the UK (including Northern Ireland). In the event of no agreement on the future relationship between the EU and UK, the UK will become a “third country” for the purposes of the General Data Protection Regulation (the “GDPR”) and transfers of Personal Data to the UK (including Northern Ireland) will be subject to the rules on International Transfers to Third Countries.

If your business involves the transfer of Personal Data to or from the UK (including Northern Ireland), you will need to ensure that sufficient safeguards are in place so that you can continue to transfer this data after the transition period.

Can you give me some examples of where my business could be transferring Personal Data to the UK (including Northern Ireland)?

Some common examples of ways in which you could be transferring Personal Data to a UK (including Northern Ireland) based business would include:

• Where you are using a UK (including Northern Ireland) based marketing business to send marketing communications to your customer database.
• Where you are using mailing lists to communicate with UK (including Northern Ireland) based clients.
• Where you are transferring your employee data to an out-sourced service provider located in the UK (including Northern-Ireland) for your ICT, payroll, pension or HR administration services. You should also check whether your occupational health provider is based in the UK (including Northern Ireland).
• Where you are transferring your employee, customer or supplier data to a UK (including Northern Ireland) based business for translation/transcribing Services.
• Where you are using data or cloud storage or website hosting facilities which are located in the UK (including Northern Ireland) that involve the storage of Personal Data (e.g. where you need to log in using a first-name, last-name format).
• Where you are using a UK (including Northern Ireland) based business to analyse visitors to your website.  

What can I do now?

All businesses are advised to review their existing processes and contracts to assess whether they involve Personal Data transfers to the UK (including Northern Ireland).

Businesses should in cases where they are transferring Personal Data to the UK (including Northern Ireland) consider the options available under the GDPR to enable them to continue to lawfully transfer these data to the UK (including Northern Ireland) in a post transition environment.

Options that can be considered may include:

• Amending contracts and inserting the model Standard Contractual Clauses (SCCs) – (Article 46 – GDPR). Information on the “model” clauses and a sample set of SCCs (Controller to Processor) can be found on the Data Protection Commission website at: dataprotection.ie/en/media/123.
• Applying for Binding Corporate Rules (“BCRs”) to be adopted for Group transfers (Article 47 – GDPR).
• Considering whether any of the derogations provided for under Article 49 of the GDPR apply. It is important to remember that these derogations can only be used in limited circumstance as set out in Article 49(1) and are usually not suitable for “repetitive” or “regular” transfers of Personal Data.
• Updating Privacy Notices and other data protection documents and website content that set out how your business “transfers” Personal Data (i.e. the “where” and “why” in the data chain). 

Further Information

Further information can be found on the Data Protection Commission’s website. In addition, a Guidance Note to assist businesses who might transfer Personal Data to the UK (including Northern Ireland) in the event of a “No Deal” Brexit is available here: Transfers of Personal Data from Ireland to the UK in the Event of a ‘No-Deal’ Brexit – Full Guidance Note

Sectoral Information

Some sectors are exposed to different Brexit-related issues than others, or are exposed to a greater extent. Below you will find information on sector-specific Brexit-related issues.