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Brexit: how can French winegrowers prepare themselves?

Article
20 January 2020
14 minutes of reading

The effective date of the United Kingdom’s exit from the European Union is January 31st 2020. It will inaugurate a transition period until December 31st, 2020, after which new rules of operation, circulation and trade will be imposed. What consequences can be anticipated for the wine trade? How can European winegrowers prepare themselves? Should they worry?

When will the changes take effect?

If the exit date of the United Kingdom from the European Union is set at 31 January 2020, a a transition period until December 31st 2020, will leave the system unaffected. During these eleven months, the UK will comply with European regulations and will participate financially in its operation. The current common agreements will be maintained. Commodities and persons will move freely between the EU and the United Kingdom.

It should be noted that the European Community has warned that this transition will be extremely short due to the many points to be negotiated. If Boris Johnson, the present Prime Minister of the United Kingdom, objects, the agreement provides for the possibility of extending the transition, by one or two years. Nothing has yet been decided on this subject; negotiations between the British and European partners will determine whether it is useful or not (the request for an extension must be made before June 30th 2020).

To facilitate the transition, the British government has put forward the idea of suspending the obligation of administrative formalities for the import of European wines for nine months following Brexit. Today, this governmental text is awaiting validation by the British Parliament. If confirmed, European wines will be exempted from administrative formalities for 9 months after Brexit.

Changes on which issues for the wine business?

Without extension, the date of re-establishment of customs borders will be effective on January 1st 2021. A free trade agreement could be concluded between the United Kingdom and the European Union, as is already the case between the EU and Norway or Switzerland. However, there would still be an obligation to make a customs declaration, on the exit and entry of goods into and out of British and European territories.

When the United Kingdom leaves the EU, it will become a third country: exchanging products with this country will become an import and export operation which will require a new management of trade and therefore, of the associated administrative documents.

Today's paperworks

French winegrowers who trade with the United Kingdom must already have a transport ticket certifying that excise duties (taxes) are either paid (under cover of a SAD - Simplified Accompanying Document, drawn up by the consignor) or suspended (under cover of the e-AD). This document, the e-AD (Electronic Accompanying Documen) is currently dedicated to intra-community movement. The winery takes care of it, via the EMCS-GAMMA teleservice.

In the case of a shipment to individuals, he should use a fiscal representation service.

Tommorow's paperworks

Tomorrow, the DAE will be an export e-AD, which will be cleared by export customs, on leaving the European territory. Established by the exporting company (the winegrower), this DAE will cover the movement of products from the loading point (vineyard estate) to the border point (exit office).

Customs formalities in France will be carried out by means of an export declaration (Single Administrative Document) issued by the carrier or customs agent chosen by the winegrower.

Uncertainties

At this stage of the negotiations, it is not yet clear whether or not there will be a trade agreement between the United Kingdom and the European Union. For French winegrowers who have a market in the United Kingdom, the questions mainly concern the amount of customs duties, which will affect the profitability of exports.

Other subjects raise questions: exchange rate evolution and devaluation of the pound sterling, fluidity of transport potentially slowed down by customs formalities... Certain sales outlets and restaurants in the United Kingdom are already building up stocks to prevent a possible shortage; a predisposition which may have boosted sales over a given period but which heralds greater difficulty in forecasting export volumes.

How to prepare?

Although the paperwork will not be fundamentally very different, European winegrowers can already prepare for Brexit by anticipating their wishes and their organization.

The French Ministry of Action and Public Accounts has drawn up a customs guide to preparing for Brexit which is available on the portal of the Directorate General of Customs and Indirect Taxes :

It identifies some useful questions to anticipate changes:

References

Today, 55% of wine consumed in the UK is European. The UK is the 2nd largest wine importing country in the world and the 6th largest wine consuming country in the world. Each year, France exports more than 1.10 billion euros worth of goods to the UK*.

To sum-up :

What has changed since December 31st, 2020

The post-Brexit agreement abolishes import duties on all shipments with a value of less than 135 GBP, however, this exemption does not apply to products subject to excise duty.

The excise taxes are as below:
  • Still wine
<=15% : 297,57 £ / HL
>15% : 396,72 £ / HL
  • Sparkling wine
<=15% : 381,15 £ / HL
>15% : 381,15 £ / HL
  • Spirits
2874 £ / HLAP
20% VAT
In addition to this, there are the charges applied, paperwork administration charges and the fees incurred for crossing the border, which vary according to the carriers.
Finally, starting September 2022, on your wine lable will be required to include the name and address of your importer. Beers and spirits will have to mention a food handler on the bottles. Beers and spirits will have to mention a Food Business Operator on their bottles.
* Source : https://www.vinsocialclub.fr/magazine-vin/actualite-du-vin/consequences-du-brexit-pour-les-producteurs-de-vin/

Photo credit: © Ilshat - stock.adobe.com / Arzel Création

Copywriting: Aurélie JEANNIN

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