Brexit Shipping Checklist

Since January the 1st, 2021, UK retailers are trading under a new Free Trade Agreement (FTA) called the Trade and Cooperation Agreement (TCA) between the UK and the EU. EU member states now treat goods entering the EU from the UK in the same way as goods entering from other non-EU countries, although no tariffs or quotas are applying to them.

Things have become increasingly complicated for UK retailers that want to ship to the EU. There is much confusion lately as various stakeholders offer different interpretations of the new trading rules and what needs to be done.

Since the beginning of 2019, here at Shiptheory, we are working closely with our channel and shipping partners to provide our customers with all the tools and information they need to avoid misinterpretation of the new trading rules, clarify processes, and help them ship their products seamlessly post-Brexit.

In this guide, we share with you four necessary steps to take to ship your orders to the EU frictionless and avoid your shipments being delayed (due to physical examinations of the goods), returned, or pay more tax.

1. Register for an EORI number

An Economic Operator Registration and Identification number (EORI) is an EU requirement for businesses which import or export goods to and from the EU. You need an EORI number that starts with 'GB' to export goods from England, Wales, or Scotland and one starting with 'XI' if you ship goods to or from Northern Ireland. You can register for an EORI number here.

2. Understand the Rules of Origin

To benefit under the Trade and Cooperation Agreement (TCA), goods will have to be of UK or EU origin. These rules are set out in the TCA and determine the origin of goods based on where the products or materials used in their production originate.

The purpose of these rules is to ensure that preferential tariffs are only given to goods that originate in the UK or EU and not from third countries. For more information on the Rules of Origin, please read here.

3. Understand customs and clearance requirements

Some products may be subject to specific export or import rules, licences, controls, or processing and will require additional certification and presentation at border posts. Sanitary and phytosanitary products are a good example. Any licences or certificates must travel with the goods. For more information on requirements for exporting goods, read here.

4. Include a Commercial Invoice and a CN22 or CN23 form

The rules for importing and exporting to the EU have changed, and UK businesses will need to complete customs documentation for their shipments. But not to worry, we have you covered. Shiptheory will automatically generate your shipping labels AND customs documentation, moments after an order is complete.

Every shipment to the EU will now need a commercial invoice with information for customs authorities. A commercial invoice is a document containing important information about the goods you intend to ship. The commercial invoice should preferably be printed on paper that includes your company's letterhead.

You can avoid customs delays, speed up delivery, and reduce paperwork by registering for ETD (Electronic Trade Documents or Paperless Trade) to submit commercial invoices electronically to every carrier that supports Paperless Trade.

It is vital to supply a commercial invoice with the right information as it reduces the possibility of your shipment to be delayed, returned, or paying more tax.

The information must be in English and include your company details, such as the address, contact details and VAT number. You will also need to have the same information about the receiver.

Besides your company's and receiver's details, you should also include the following information:

• Your EORI number

Besides your EORI number, you should also include the receiver's EORI number if you ship to a company and not an individual.

• Reason for export

You must state why you are sending the goods; is it for trade, are you sending documents, commercial samples, return goods, or is it a gift?

• Shipping date and number

The shipping number is your carrier's number, sometimes known as the air waybill number.

• Incoterms

Incoterms are a set of eleven internationally recognised rules which define the responsibilities of sellers and buyers. Incoterms specifies who is responsible for paying for and managing the shipment, insurance, documentation, customs clearance, and other logistical activities. Incoterms or International Commercial Terms are published by the International Chamber of Commerce (ICC). Visit https://iccwbo.org/resources-for-business/incoterms-rules/ for more information.

• Overall description of the consignment

When shipping goods into and out of the EU, several carriers might request for a general, consignment-wide description to be provided. That description must be following the European Commission's description guidelines. For more information, please read here.

• Goods description

Describe your goods accurately and do not use company product codes. Shiptheory offers a handy product data checking tool that automatically identifies and highlights any issues or omissions in your product data and helps you significantly reduce the chance your shipments being delayed, returned, or paying more tax.

• Quantity of goods

If you are shipping different products, state the quantity of each using an appropriate unit of measurement.

• HS Codes

Harmonisation Codes or Tariff Codes or Commodity Codes are an internationally standardised system of names and numbers developed by the World Customs Organization, and they are used to classify traded products. The HS codes are required on customs declaration forms CN22 and CN23 and commercial invoices. Each commodity group is identified by either a six (Rest of World) or 8 (EU) digit code. Over 200 countries use the system as a basis for their customs tariffs. Parcelforce has developed a Tariff Code lookup tool to help you search for a Harmonisation Code, based on an item description.

• Declared value

When filling in your goods' value on your commercial invoice, use the price you are selling them for. If you are not selling the goods, use the market value of the goods instead. 

• Insurance costs

On the commercial invoice, you may need to show the freight and insurance costs as separate items. If not shown separately, customs will calculate these values for you, and you may end up paying more than necessary.

• Country of origin

The country of origin is where the products were originally manufactured. That may be different from the country the shipment is being sent from.

• Statement of origin

If you want to claim preference for goods eligible for tariff-free trade under the TCA, you will need to include a statement of origin on the commercial invoice that declares that the goods are of EU or UK origin. 

• Weight

You will need to include both the net and gross weight of the goods you are shipping.

CN22 and CN23 forms are required customs documents for international shipping, and they are mainly used for shipments that are transported by a postal company. These forms are used by the Universal Postal Union and are therefore mandatory for all postal services. They contain information about the goods you are shipping, and along with commercial invoices, they enable customs authorities to determine whether import duties must be paid and help them assess risks.

The CN22 form is less detailed than the CN23 one, and both forms must be attached to the outside of the shipping box. Also, a CN23 form is always accompanied by a CP71 dispatch note. A CN22 form needs to be filled out and attached to items with a value up to £270 and a CN23 to items with a value over £270.

The main difference between the above forms and a commercial invoice is that a commercial invoice is always required for all e-commerce shipments. However, only parcels sent via postal services need the additional CN22 or CN23 document. 

Nevertheless, to avoid delays, we recommend that you always include both documents with your shipments. 

Finally, remember to sign your CN22, CN23, and commercial invoices and always keep a copy for your records.

Shiptheory is a cloud-based shipping management platform that connects e-commerce retailers with the world's best carriers to automate shipping labels, manifests, customs documentation, and tracking. Shiptheory is an official OnBuy partner.