Netherlands: Potential trade, customs implications of “Brexit” on Dutch businesses

Netherlands: Implications of Brexit on Dutch businesses

The United Kingdom’s departure from the European Union and the related trade and customs implications is anticipated to have far-reaching effects on the Dutch economy. The expected increase in the number of transactions at the border will not only have major implications on enforcement services—including Dutch Customs, the Netherlands Food and Consumer Product Safety Authority (NWFA) and the Human Environment and Transport Inspectorate (ILT)—but Dutch businesses also would be affected.

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At the conclusion of the Brexit negotiations, when the United Kingdom becomes a “third country” for the EU and thus will no longer be able to benefit from the EU internal market, the trade relationship will return to its pre-1993 level, and customs formalities will be unavoidable. The implications for the Netherlands is expected to be dramatic because the Netherlands acts as the EU’s logistical delta. The Netherlands currently clears almost one-third of the total number of the EU’s customs transactions, and this is expected to increase significantly when all European Community supplies from and to the United Kingdom qualify as exports or imports.

According to statistics supplied by the Dutch Customs: 

  • The physical entry and exit of goods will increase by 32% and 137%, respectively, as a result of Brexit. 
  • An additional 1.5 million entry declarations and more than 5 million exit declarations will have to be processed. 
  • The actual import and export of goods will also increase sharply to 18% and 33%, respectively. 
  • Approximately 1.2 million additional consignments under customs control will have to be transported—an increase of 30%. 

Some businesses will encounter customs formalities for the very first time. Statistics reveal that of the businesses that made a purchase or sale with the United Kingdom in 2016, more than 35,000 unique value added tax (VAT) registration numbers are still not known to Dutch Customs. If these businesses were to file an import or export declaration, this would result in a 40% increase in the number of businesses that maintain a relationship with the Dutch Customs. Of the new relationships, more than 25,000 VAT registration numbers were used to make a purchase from the United Kingdom with a value of €7.3 billion. This means that 30% of the value of the trade with the UK is made by businesses that are currently not known to Dutch Customs.

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Affected businesses may need to reconsider their position. For instance, they may need to ask themselves whether their present customs clearance procedure is still effective. In many cases, expanding the existing authorizations in combination with customs simplification may offer a solution. However, businesses will first have to examine whether they comply with the relevant Dutch Customs conditions. Moreover, the expected increase in the number of requests means the assessment by Customs will take longer. If businesses wish to obtain non-standard authorizations or if they have special obligations, then the entire process may take a year or more. This means that time is of the essence.

 

Read a July 2017 release [PDF 188 KB] prepred by the KPMG member firm in the Netherlands

 

For more information, contact a tax professional in the Netherlands:

Leon Kanters | +31 (0)88 90 93167 | kanters.leon@kpmg.com

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