Brexit boost for duty free; legislative platform is already in place, says ETRC

Click image to view the Brexit edition of The Moodie Davitt e-Zine
Click to view the post-Brexit edition of the Moodie Davitt e-Zine, which examines in detail what it would take for a return of UK duty free sales to EU-bound passengers

UK. In a potentially huge boost for the travel retail industry, existing legislation will permit EU travellers to purchase duty free when travelling to the UK as soon as the country leaves the European Union.

That’s according to the ETRC, which has been working with government, customs and industry bodies since the Brexit vote on 23 June.

ETRC Director General Keith Spinks said: “Based on current legislation, the moment the UK leaves the EU it becomes a third country and the Treaty of Lisbon no longer applies. You can then sell duty free to EU travellers going into the UK as a matter of principle. No new legislation is required at EU level.”

Critically, the rules imply that this would be effective regardless of the UK’s membership of the EU Single Market or a Customs Union. The day that it leaves the EU, the treaties it has signed up to would in principle no longer apply. Rules governing duty free purchases to EU travellers heading for the UK would then work in the same way as with any other non-EU state.

In the UK, we understand, some new legislation governing excise duty and VAT would be required.

The ETRC and other stakeholders are vigorously pushing for duty free’s interests to be high on the UK government’s agenda once it triggers the EU’s Article 50, which Prime Minister Theresa May has said will happen next March. That will begin the exit process, which is currently scheduled to run for two years – unless its EU partners allow the UK additional time to negotiate.

Comment: Although the legislative position appears positive, work remains to be done to ensure a smooth and full reintroduction of duty free in the UK, writes Dermot Davitt. The UK still needs to amend its own excise duty and VAT rules to allow EU-bound travellers leaving the UK to purchase duty free once Brexit occurs.

Potential obstacles could come in the form of domestic market retail opposition against a return to duty free sales, or if the EU decides to update its own legislation with regard to duty free sales to third countries.

Crucially, as a state unbound by EU treaties, the UK will also be in a position to dictate its own allowances regime.

The industry must now drive home the positives of Brexit to the UK authorities to ensure that the necessary changes are made to duty free shopping definitions and rules. Expect campaigners to cite the possible resurgence in maritime retail sales – and therefore port and ferry jobs – as well as the benefits to struggling regional airports as well as larger airports. Quietly and behind the scenes, the job now is to win as much political support as possible in advance of the triggering of Article 50, and to ensure every advantage for travel retail can be gained.

Once initiated, Article 50 cannot be revoked and the clock will tick on the UK’s eventual departure – and the possible return of duty free sales to EU travellers, perhaps as soon as March 2019.

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