Brexit guide for jewellers: what you need to know about selling to the EU
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As jewellers all we want to do is make and create beautiful jewellery that we can sell to customers all over the world. So what is the impact of Brexit on how we can do this? How do we make sure that our businesses and customers aren’t affected by the changes? Take a look at our comprehensive guide for selling your handmade jewellery to EU countries in a post Brexit world!
Don’t panic!
As you are probably aware, the UK left the European Union on 31st December 2020. And on 1st January 2021, the transition arrangements for trade that were in place following the UK’s departure from the EU Bloc came to an end and the new post Brexit trade deal came into place. There is a lot of confusion for small businesses about what has changed. But don’t panic! We have you covered!
What does Brexit mean for jewellers?
The UK/ EU trade deal signed in December 2020 was highly publicised as a highly advantageous trade deal to both parties. So it was easy to assume that this meant very little would change. Unfortunately, moving to the post-Brexit trade terms has caused some changes, particularly with how products and services can be sold from the UK to the EU that we all need to be aware of.
So what does it mean for jewellers?
This blog post covers everything that we know so far about selling your jewellery to EU countries post-Brexit (or from EU countries to the UK).
It is important to note that due to how late in the day a post-Brexit deal was reached between the EU and the UK, the detail of how is will work practically is still being clarified and issues that come up are being worked through so things are likely to take a little bit of time to fully become clear and trade between the UK and EU starts running completely smoothly again.
Please note that these arrangements apply to jewellery being sold to the EU from the UK Mainland, but not jewellery that is sold from Ireland as separate arrangements are in place for Ireland.
If you plan on exporting high volumes of jewellery to the EU, employ EU staff, or sell via EU stockists, we recommend you seek specialist advice to ensure that you are fully compliant with the new rules.
We are going to start with the nuts of bolts of exporting to the EU post-Brexit, and then we will highlight some other considerations you need to think about.
Selling & exporting jewellery to the EU post-Brexit
One of the principle differences to the pre and post-Brexit trade arrangements is that more paperwork is now required when sending products to countries within the EU Bloc. It is important to familiarise yourself with these requirements if you sell, or plan to sell your jewellery to EU countries.
EORI number
If you plan of exporting goods to the EU from England, Wales or Scotland, or are sending jewellery to EU stockists, you now need an EORI number. This will start with the letters ‘GB’. If you move goods to or from Northern Ireland you may need one that starts with ‘XI’.
It can take up to a week from your application to receive your EORI number. You will not be able to move your goods into or out of the EU without an EORI number.
The good news is that it is very easy to apply for your EORI number and we encourage you to do so for your business as soon as possible.
You may also need to register for VAT so it’s worth checking this.
Check if you need to register for VAT
It is worth doing both of these things as they could make your life much easier and will ensure your goods clear customs quicker if you plan on exporting your jewellery to the EU regularly.
Customs Declaration Forms are now required
From 1st January 2021, you need to complete a customs declaration if you’re sending goods to a country outside the UK. The main exception to this is when sending items from Northern Ireland to the EU, where no customs declarations are required for sending gifts or goods.
The forms you need to use are:
For items with a value up to £270 use customs declaration form CN22
For items with a value over £270 use customs declaration form CN23
To make sure that your items clear customs without unnecessary delays in the destination country, you must complete all applicable fields in the correct customs declaration form, ideally writing in English or in the language of the destination country.
It is recommended that you attach an invoice to the outside of your parcels, as this will assist Customs in processing the items and reduce the likelihood of unnecessary delays.
EU VAT & Customs Duties
The bad news for UK-based jewellers is that customs clearance charges and fees may now be payable by EU customers on items/goods (excluding personal correspondence) entering the destination country. The cost of these fees largely depends on the value of the content.
It is important to advise customers that they may be required to pay these duties as the parcel won’t be released by the customs in their country until these fees and duties have been paid. These duties are set by the destination countries and are out with your control. We recommend including a caveat about custom duties, VAT and handling fees in your Terms and Conditions and product listings so that customers are not caught unaware.
We also recommend that at least in the short-term, you include a caveat in your product listings that says something along the lines of ‘Please be aware that now the UK has left the EU, anyone purchasing from outside the UK may be charged customs and VAT duties as their items enter their own country. These duties are set by the government of each country and are outside our control’.
We also recommend that you update your order confirmation emails to include this caveat and perhaps email customers directly following an international sale to confirm that they may be required to pay customs charges before receiving their item(s) and giving them the option of cancelling the order.
The rate of customs duty (tariffs) applied to imports depends on four things:
The value of your goods
The category your goods fall into
The country they are being imported into; and
Where the good originates from
The importance of the statement of origin
The trade agreement that the UK reached with the EU that came into effect from 1 January 2021 establishes zero tariffs or quotas on trade between the UK and the EU, where goods meet the relevant rules of origin.
This means that for jewellery where all the components are sourced and the item is fabricated in the UK should be eligible for zero tariffs. However, you will have to make sure that you CAREFULLY make a statement of origin for every parcel you export otherwise you run the risk of the customer having to inadvertently pay customs duties.
Your statement of origin MUST follow the wording set out in annex ORIG-4 to the TCA. You will be responsible for the correctness of the statement and will need to ensure you have adequate documentation on file to evidence origin.
Statement of Origin WORDING
This evidence may include suppliers' (Cooksons, Kernowcraft etc) declarations, where necessary.
And, you need to retain this documentation for four years just in case!
How to accurately complete a Statement of Origin
In order to accurately complete a Statement of Origin when exporting jewellery to the EU, you will need to determine whether:
The jewellery wholly originates in the UK
The jewellery partially originates in the UK (some non-originating materials used)
The jewellery wholly originates from outside the UK
This can get a little complicated so we have given some examples below:
Example A - a completely handcrafted silver gemstone pendant including handmade findings
For example, a silver pendant, handcrafted entirely by hand by a handmade jeweller in the UK using some non-originating materials (i.e. gemstones). In this instance, the silver used is created in the UK by a UK manufacturer and the jeweller hand makes their findings from scratch using this UK produced metal. In this case, the non-originating materials (gemstones) make up less than 50% of the cost of the price of the final product with the remaining 50% + being made up of labour costs, branding, post and packaging etc). This means that the product meets the PSR as the non-originating materials make up less than the maximum 50% threshold for non-originating content and have been suitably processed or ‘transformed’ by the maker.
Example B - assembled jewellery design using gemstones, components and findings that are not produced in the UK
However, for jewellery that is assembled in the UK using bought or imported silver, gold-filled metal findings and gemstones (using only non-originating materials) it is a little more complicated.
Even if these non-originating materials make up 50% or less than the total price of the product and the remaining 50+% of the total product price is made up other costs such as design costs, labour costs, branding, post and packaging etc) unfortunately it would not qualify as originating in the UK. This is because, although the final product meets the PSR (as the non-originating materials make up less than the maximum 50% threshold for non-originating content) it will not be considered originating in the UK if the only processing that takes place in the UK is classified as ‘simple assembly’ (see Article ORIG.7 1). This is the case even if the materials are sourced entirely within the EU. However, if the jewellery design includes some handmade components, includes some UK sourced materials, or are permanently affixed (soldered) to UK sourced materials, this would count as going beyond insufficient processing and would be considered ‘UK originating’ because it incorporates UK-originating components and has been processed beyond what is classed as simple assembly.
Some jewellers will be certain that their products will qualify as wholly originating in the UK. This is because you and only you have carried out the processes that sufficiently transform the product to qualify under the rules of origin.
This is particularly relevant when third-party components are less than the tolerances, or because they have only used materials that are wholly obtained so it’s important to check with your suppliers. Otherwise, a manufacturer may need to rely on a supplier’s declaration that the components used are originating. There is a template for these declarations in the TCA annex ORIG-3 and HMRC provides further guidance.
Essentially to ensure that your jewellery qualifies for zero tariffs, you need to ensure that:
At least some of the materials used are UK produced
That complex processing is involved in creating your jewellery designs
That you are not simply assembling jewellery from pre-made components purchased outside the UK
And you need to be able to prove this if asked! So ensuring that you have checked the origin statements from suppliers is going to be key here. Again, please store these origin statements from suppliers for at least 4 years.
Options for jewellers who assemble their jewellery designs
So that’s all good and well, but what if assembling jewellery to create designs is your primary business model!? What options are available to you? There are a couple of options for jewellers who currently assemble their jewellery designs from bought components. These are:
Learn basic techniques that will allow you to create some components of the design yourself to use alongside non-originating purchased components (e.g. metalsmithing, wax carving, metal clay etc) that will allow you to meet the threshold of sufficient processing
Accept that your customers will most likely have to pay customs duties upon receiving the products purchased from you and ensure this is included in your T&Cs and product listings. This will already be the case when sending jewellery to other countries worldwide such as America.
Posting your jewellery to EU Countries
It is vital that when packing and posting your jewellery to EU countries, that you accurate fill out a customs form (either a CN22 or a CN23 depending on the value of your item), and include a completed invoice and any licences or certificates that need to travel with your item.
When filling in the value of your jewellery on the invoice, use the price you’re selling the piece for. If you're not selling the goods, use the market value of the goods. You can list any insurance you included in the price separately.
You may need proof of origin if exporting to a country where your goods have a reduced or zero rate of duty.
Get proof of origin for your goods
You might be able to zero rate the goods for VAT. This means you can charge your customers VAT at 0%.
Check if you can zero rate the goods for VAT
Commodity code information for jewellery
Postal Delays due to Brexit (and Covid)!
One of the biggest impacts in the short term for jewellers posting items abroad is delays to shipping times. The extra paperwork and checks (plus staff being impacted by Covid 19) means that post is likely to take a little bit longer than it used to, at least in the short-term.
We advise that you adjust your advertised shipping times and add a caveat to your website and product listings advising customers due to factors beyond your control, parcels are taking longer to reach their final destination and request your customer’s understanding.
We are sure that over time, things will settle down and shipping times will revert to normal. But until they do it is important to manage customer expectations.
Keep invoices and records for at least 4 years
Now, for UK tax purposes, your are meant to retain your invoices and records for at least 7 years, but for exporting the recommendation is 4 years. This means you must keep commercial invoices and any customs paperwork for that length of time.
If you're VAT registered, record the goods in your VAT accounts even if they are zero-rated.
Other considerations post Brexit
There are some other considerations you need to make to ensure your are compliant in the post-Brexit world. These include:
Hallmarking
Taking Payments
GDPR
Hallmarking
A If you export or sell your jewellery through retailers in the EU
One of the biggest impacts of Brexit for jewellers is the slight change to Hallmarking rules. Prior to Brexit, the UK was obliged to recognise EU hallmarks and equally, EU countries were obliged to recognise UK hallmarks.
However, that agreement has now ceased.
For any products already on the market before January 2021, you don’t need to make any changes. But any new stock entering the UK market will now require a UK Hallmark. Equally, any stock exported to EU members will require a mark recognised by the receiving country.
For the Northern Irish market, EU hallmarks will continue to be recognised, by virtue of the European Union (Withdrawal) Act.
The UK exemption for hallmarking weights of 7.78 grams for silver, 1 gram for gold/palladium and 0.5 grams for platinum may not apply in other countries so it is important to check the hallmarking requirements of the countries you plan to export to or sell in.
The Common Control Mark (CCM) applied by signatories to the Vienna Convention on the Control of Precious Metal Articles will continue to be recognised in the UK and by Convention members Austria, Croatia, Cyprus, Czech Republic, Denmark, Finland, Hungary, Republic of Ireland, Israel, Latvia, Lithuania, Netherlands, Norway, Poland, Portugal, Slovak Republic, Slovenia, Sweden, Switzerland. Serbia and Italy are in the process of ratifying joining.
You can apply a CCM mark to your goods now with no impact on your current import or export requirements. The CCM mark can be applied to new articles along with UK Assay Office marks or as an addition to articles already bearing UK hallmarks.
You can find out more about the CCM mark on the Assay Office website.
B If you sell your jewellery directly to individuals in the EU
When it comes to selling jewellery directly to individuals based in the EU in person (or more likely online), each consumer is protected by the consumer laws in the country that they are purchasing from. This is the case even when they purchase online.
This means that for international sales, you will now need to follow the hallmarking regulations for that country.
For example, where a UK customer buys something from an EU country, it should have a UK hallmark or an equivalent mark such as the Convention mark which would be applied in the country of origin or the hallmark of the destination country. Those selling jewellery to UK citizens from abroad should adhere to these rules and are liable as the UK consumer is protected by UK law.
If an EU customer buys from a UK jeweller, the UK jeweller needs to make sure that the marks applied to the jewellery are legal in the country from where the item was purchased. So whilst the UK hallmark or Convention/ Common Control Mark may cover the majority of EU states, it unfortunately doesn’t cover all of them and indeed some of the largest countries in the EU have not yet signed up to this. The countries that are signed up to the Convention/ Common Control (CMM) mark are the UK, Austria, Croatia, Cyprus, Czech Republic, Denmark, Finland, Hungary, Republic of Ireland, Israel, Latvia, Lithuania, Netherlands, Norway, Poland, Portugal, Slovak Republic, Slovenia, Sweden, Switzerland. Serbia and Italy are in the process of ratifying joining.
The assay offices in the UK can apply the Convention mark alongside the standard UK hallmark.
It is therefore important to check and adhere to the regulations in the likes of France, Spain which both have legal requirements for hallmarking. Jewellers importing to France must register with the Bureux de Garantie. Luxembourg and Germany do not require a hallmark.
Obviously for customers in the UK buying from a UK jeweller, it goes without saying that all precious metal pieces need to adhere to the UK hallmarking regulations of items over 7.78g for silver, 1g for gold and palladium and 0.5g for platinum. For the Republic of Ireland there are no exemption weights so all items must have a CMM.
Taking online payments post brexit
Strong Customer Authentication for in-person digital payments
Strong Customer Authentication (SCA) is a new requirement of the second Payment Services Directive (PSD2), which aims to add more security to electronic payments to reduce fraud. Fraud losses for online payments have been steadily increasing for nearly a decade with little sign of easing. These regulations are due to come into force on September 15th 2021 in the UK, and from January 1st 2021 in most of the EEA for e-commerce.
SCA applies to the European Economic Area (EEA) and the United Kingdom, and will continue to apply to the UK now the UK has left the EU. It will require banks to perform additional checks when consumers make payments to confirm their identity. To do this, banks may ask for a combination of two forms of identification at checkout. Examples include:
Knowledge - something they know (like a password or pin)
Possession - something they have (mobile phone, card reader, one-time passcode)
Inherence - something they are (like a fingerprint)
Your customers may need to provide two forms of identification to their bank when shopping from you. This also applies now for face-to-face payments. If your customer cannot be identified using two factors, their payments to you might be considered non-compliant and be declined.
These regulations come into force on September 15th 2021 in the UK, and from January 1st 2021 in most of the EEA for e-commerce.
Your business bank, or the company that provides the checkout service for your website, will be able to “switch on” the technology required to perform the checks required by the regulation. Please contact them to ensure you are ready to meet the new requirements for online payments from September 15th 2021.
Your customers may be asked to verify their identity with two factors during the checkout process.
A technology called 3D Secure can help you meet this requirement. Your website or payment providers are likely to already be building this technology into their offerings. You may already be seeing this extra layer of security when purchasing goods and making payments online. But it is worth checking well ahead of the deadline to make sure that your international payments continue to be processed after the 15th September 2021 deadline.
Paypal is currently implementing similar processes to their payment gateway to meet these requirements with customers having to input a 1-time code when making purchases that they receive to their mobile phone.
GDPR
The General Data Protection Regulation (GDPR) has been retained in UK law post-Brexit, and will continue to sit alongside the Data Protection Act 2018. UK and EU data protection law is therefore aligned and you should continue with your current GDPR provisions.
If you’re not sure about this do check out our blog post - GDPR for Jewellers >
And that’s it!
Hopefully this guide has helped you understand what you need to do to ensure that your business and your customers face minimal impact following the end of the transition arrangements. Things are likely to change and settle down over time as we all get used to life in a post Brexit world. But we will keep you updated of any changes or additional information to help you navigate through it!
If you are interested in more business support and training our annual Jewellery Business Bootcamp starts in February 2021 and is open for enrolment. The Jewellery Business Bootcamp is an 8 week, live and interactive online course aimed at helping you grow a thriving, full-time, profitable jewellery business.
If it sounds like what you need do take a look!