UK/EU. With the UK set to exit the European Union on 31 January, industry lobbyists will press for harmonised rules between the UK and EU on duty and tax free sales in negotiations that will follow over the future trading relationship.
The UK’s exit looks likely to follow Thursday’s resounding Conservative victory in the General Election, with Prime Minister Boris Johnson confirming his intention to take the country out of the trading bloc. That will trigger negotiations on the future relationship between the UK and EU.
The UK has said it aims to complete these negotiations by the end of 2020, though this may be extended. During the transition period, there will be no return for duty free sales between the UK and EU. Under the terms of the withdrawal agreement struck by the Prime Minister (and now expected to be ratified), the UK would stay in the single market and the customs union for a transition period – meaning no duty free shopping in either direction.
European Travel Retail Confederation (ETRC) President Nigel Keal said: “Throughout these negotiations ETRC, UKTRF and the other industry representatives will be ensuring our voice is heard in both London and Brussels and in capital cities around Europe.”
The ETRC said it would be lobbying the EU authorities to allow duty free sales at EU international train stations, to mirror rules that will allow stores to open at UK international stations if there is a return to a duty free regime
He expressed renewed concern over the UK government’s current position on VAT if and when duty free sales are reintroduced to EU-bound passengers. As reported, to the disappointment of the UK industry, VAT will not be removed from all categories sold airside in the event of a return to duty free or a ‘no-deal Brexit’, which could happen if the UK does not reach a long-term agreement with the EU by the end of the transition period.
As it stands, the UK government position is to remove duty and tax from alcohol and tobacco goods sold to travellers from the UK to the EU, but it has refused to remove VAT from other product categories available airside. This is despite the EU signalling its intention to remove duty and tax from all airside products if duty free rules return.
In related news, the ETRC said it would be lobbying the EU authorities to allow duty free sales at EU international train stations, to mirror rules that will allow stores to open at UK international stations if there is a return to a duty free regime. Announcing plans for a possible return to duty free from the UK to the EU in September, Chancellor Sajid Javid said these would apply to “UK ports, airports and international train stations”.