UK. “Get on with it,” said UK Prime Minister Theresa May yesterday as she spelled out her plans for the country’s ‘Brexit’ separation from the European Union. And those may soon be the welcome words for the UK and European duty free sector as it steps up plans to recommence sales to passengers traveling between the UK and EU countries, a channel that was scrapped in 1999.
As reported, existing legislation will permit EU passengers to purchase duty free when travelling to the UK as soon as the country leaves the European Union. And while the UK will need to amend its excise duty and VAT rules to allow EU-bound travellers leaving the UK to purchase duty free post-Brexit, the path and the timeline are now increasingly clear.
The lobby and the industry have everything to play for, a wholly unexpected salvation some 20 years after the seeming disaster of the abolition of intra-EU duty free
“We seek a new and equal partnership — between an independent, self-governing, global Britain and our friends and allies in the EU,” May said. “Not partial membership of the European Union, associate membership of the European Union, or anything that leaves us half in, half out.”
May said she hoped to complete a deal with the European Union by March 2019 and pledged it would be voted on by both the House of Commons and House of Lords.
“Not… anything that leaves us half in, half out” – those are key words. Once the UK actually exits the EU then EU countries can sell duty free to UK-bound travellers. And, subject to the legislative changes cited earlier, UK retailers will be able to sell to passengers heading to EU countries.
[“What kind of country do we want to be?” asks Theresa May. “I want us to be a truly global Britain, the best friend and neighbour to our European partners but a country that reaches beyond the borders of Europe too.” Click on the YouTube icon to watch Sky News’ broadcast of Theresa May’s seminal speech.]
Prime Minister May said she will put the exit-triggering mechanism of Article 50 into motion by the end of March 2017. Assuming she is able to do so, withdrawal must be completed within two years.
There are, however, stumbling blocks. May’s pledge to put the matter to two Parliamentary votes could theoretically pose problems, though Brexit Secretary David Davis said this week that Britain will leave the EU even if MPs reject a Brexit deal.
Brexit is travel retail’s “biggest opportunity in a generation” – Brian Collie
That position also eases any complications that may arise from the imminent Supreme Court decision on the government’s challenge to an earlier High Court demand that May secure the consent of both parliamentary houses before triggering Article 50.
If all goes to plan, then duty free between the UK and the EU could be back in place by March 2019 at the latest. Lobbying groups the UK Travel Retail Forum and the European Travel Retail Confederation (ETRC) are working hard behind the scenes to pave the way for what will be a tremendous boost for the UK and EU duty free sectors.
It now seems a matter of when, not if, duty free will return (something that has important repercussions too should other EU countries leave the Union). The lobby and the industry have everything to play for, a wholly unexpected salvation some 20 years after the seeming disaster of the abolition of intra-EU duty free. Last time around it was a rearguard and ultimately unsuccessful defensive campaign. This time the industry moves onto the front foot, advocating a change that will bring jobs, consumer benefits and a boost for the travel and aviation sectors.
Former BAA Group Retail Director and World Duty Free Chairman Brian Collie memorably described the impact of Brexit as travel retail’s “biggest opportunity in a generation”. He’s right.
