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Preparations for Brexit – don’t leave it for the last moment

  • Hungary
  • General

02-04-2019

Preparations for Brexit – don’t leave it for the last moment

 

1 April 2019

As a result of a referendum three years ago the United Kingdom is going to leave the European Union (Brexit) and thus in relation with the EU Member States several changes take effect. It is essential that Your company is well prepared for this event so in the following briefing we aim to highlight the most important aspects affecting trade.
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Possible scenarios


Based on the UK’s announcement on leaving the EU, the original date of withdrawal was 29 March 2019. As of the latest developments, this date is postponed but until when is still uncertain. The two possible withdrawal dates now are 12 April 2019 and 22 May 2019.
Depending on the decision of the House of Commons two possibilities are on the table: the UK leaves with a deal (soft Brexit) or without one (hard Brexit).
In the case of soft Brexit, a transition period will begin, which will last until 31 December 2020. Until that date, EU regulations will apply to the UK and EU Member States on customs, VAT and excise duties.
In the case of hard Brexit, the primary and secondary legislation of the European Union will not be applicable from the withdrawal date and the UK will be considered a third country. In the following, we briefly summarize the upcoming changes in the case of hard Brexit.

Changing customs rules

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The EU suggests the following in preparation for the customs procedure. Businesses need to
assess whether they have the necessary technical and human capacities for customs
procedures and rules, for example for the treatment of 'preferential rules of origin'.
Companies should consider obtaining different customs authorizations and registrations in
order to facilitate their commercial activities if the UK is part of their supply chain. You
should enquire with your national customs authorities to determine what further steps you
can take to prepare.
You will need to make an export declaration when you deliver the goods to the UK. An
electronic administrative document may also be required to deliver excise goods to the
United Kingdom. The rules on the origin of goods are changing - the UK is becoming a third
country which is no longer subject to the EU's preferential trade provisions of third
countries.

Export-import licenses


Import-export licenses are required for the transfer of the licensed goods from or to third
countries. From the withdrawal date, the UK is also considered a third country. EU law
requires these licenses to be obtained from the competent national authority, and EU
licenses issued in the United Kingdom will not apply from this date. It is important that You
register Your business as a company trading with non-EU countries at your national customs
authorities. The list of goods involved is available here:
https://nav.gov.hu/data/cms490387/import_export_engedelyek.pdf

Major tax changes

VAT rules will change (in Hungary: ÁFA). Directive 2006/112/EC on value added tax and
Directive 2008/9/EC laying down detailed rules for the application of Directive 2006/112/EC
are not applicable to the United Kingdom. From the date of the exit, the rules on imports and
exports apply to product and commodity movements between the EU and the UK.
More about the regulation: https://nav.gov.hu/data/cms490379/afa.pdf
British companies without an establishment in the EU can only engage in business with a
financial representative in the territory of Hungary since, under the VAT Act, the
appointment of a financial representative in Hungary is mandatory for the acquisition of the

Hungarian tax number for third country companies.

Bilateral conventions on the avoidance of double income taxation remain in effect.

Passenger traffic rules

Citizens traveling to and from the UK shall expect entry and customs controls, in
accordance with the appropriate rules for third-country nationals.
Privacy Policy – GDPR
Data transfers will also be subject to the rules governing third countries, thus transfers from
the European Union to the United Kingdom may be subject to restrictions if there is no
specific agreement with the EU. Data processors are advised to reevaluate their data
processing policies affecting the UK, it may be necessary to review and amend the contracts
that regulate them, supplementing them with appropriate data protection obligations.
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More on the subject


For summaries in taxation matters, visit the page of the national customs authority page at
https://nav.gov.hu/nav/vam/BREXIT (in Hungarian) or the European Commission's
information page for general information:
https://ec.europa.eu/taxation_customs/uk_withdrawal_en.
What can Eversheds Sutherland do for you?
Our team at Eversheds Sutherland can help you plan for post-Brexit issues.
Eversheds Sutherland as a law firm with legal experts throughout Europe in all areas of law,
is well-placed to advise businesses across all sectors. The legal experts of Eversheds
Sutherland have spoken extensively on the legal implications of a Brexit for both UK and
non-UK businesses. Eversheds Sutherland has prepared a comprehensive guide for clients on
‘Making Sense of Brexit’. Visit the website of Eversheds Sutherland on Brexit, which provides
useful additional information at https://www.evershedssutherland.
com/global/en/what/publications/brexit/index.page

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Disclaimer

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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