Brexit - consequences for Polish entrepreneurs

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The departure of Great Britain from the ranks of the European Union Member States means a fundamental change for the entire community, including Polish entrepreneurs. Brexit took place on January 1, 2021. Great Britain has so far been Poland's third largest trading partner. Brexit may mean that the economic relations of Polish entrepreneurs will become difficult. Many of them may be deprived of their economic position, former clients or even existing commercial opportunities. Companies specializing in the food, transport, automotive, electromechanical and mechanical industries can lose the most.

Brexit - could entrepreneurs prepare for it?

It should be realized that the EU regulations impose on the states that have withdrawn from the European Union the obligation to establish new rules in the field of Community law in force within 2 years from the date of withdrawal. After this period, the Community rules cease to apply. Great Britain has been a member of the Union for over 40 years, and Community law covered all its economic areas. The 2-year period for changing the regulations may turn out to be very difficult and involve many modifications and economic transformations for both British and Polish entrepreneurs. Brexit has an impact on customs, tax, population movement and financial capital regulations. As a consequence, some permits, concessions, certificates and even professional qualifications have changed.

Experts agree that so far it is difficult to clearly state what may await Polish companies in the future and how they could prepare for changes in advance, so as to minimize the economic risk as effectively as possible.

Therefore, Polish entrepreneurs are advised to conduct a full and in-depth analysis of their company's situation. At the beginning, it is worth getting acquainted with the specifics of the industry in detail and checking where the goods or services they explore ultimately reach. Successively, it is worth estimating the share in value and percentage that is threatened by Brexit and, in the event of a significant risk, prepare an action plan (e.g. change of the country receiving goods or services). The focus should be on both the legal risk, i.e. the risk of an increase in tax and customs rates, and the economic risk, i.e. the risk of blocking certain sectors of the economy or the appearance of cheaper substitutes on the market.

In order to painlessly enter the new trade order, Polish entrepreneurs should first of all familiarize themselves with the regulations and policy of the European Union towards third countries, as well as with the UK regulations on import and export with non-EU countries. An important topic for entrepreneurs should be the issue of taxes and duties on goods placed on the UK market. It should be remembered that they depend on the type of imported goods.

Another issue that entrepreneurs should read is the permits issued by the UK administration to companies trading in their country from third countries. It is about all permits, certificates, accreditations, trademarks or patents required for a given business sector. Without this documentation, it will not be possible to conduct business in a commercial partnership with entities from the Islands. Import of goods from Great Britain required the submission of import customs declarations, which means placing the goods under the customs procedure (AIS / IMPORT system).

On the other hand, goods transported from Poland to Great Britain must be declared for the export procedure in electronic form (AES / ECS2 system). The confirmation of the completion of the procedure of exportation and removal of goods from the customs territory of the European Union is the electronic message IE599 signed by the export office, which is also evidence for the tax authority in the scope of the application of the 0% VAT rate.

Which industries will suffer the most after Great Britain leaves the European Union?

The industries that benefit most from the current economic regulations are the electrical machinery industry, mechanical and electrical appliances, agricultural and food products, furniture and furniture parts, as well as vehicles, aircraft and vessels.

Despite the above, experts indicate that the most threatened among service sectors is transport and logistics. There is no doubt that the open borders have contributed to the development of transport on the Poland-Great Britain routes. Brexit may contribute to tightening customs regulations, increase the number of vehicle checks and queues at the borders. Almost every form of import and export is related to transport and logistics, which means that any company that withdraws from the UK market will also affect the transport industry. It is estimated that Brexit may reduce the revenues of Polish transport companies by as much as EUR 1 billion, i.e. over PLN 4 billion.

In turn, the largest losses among companies trading in goods may be recorded in the automotive, electromechanical, mechanical and food sectors. This will be mainly due to the fact that they are of the greatest importance in the trade turnover between Poland and Great Britain, therefore companies from these industries may experience the greatest financial drops. The real effects of Brexit will be able to be estimated by companies only after operating in the new reality for a long time. For an overview of how to settle transactions with Great Britain, see the article: Brexit - how to settle transactions with Great Britain?

Will all economic sectors lose out on Brexit?

Of course, there are sectors that will surely strengthen their position and enrich themselves on the decision of Great Britain. The financial sector is the leading business sector that can come out unscathed from Brexit. Many financial companies, fearing alienation, will move their headquarters to the European Union, including Poland.The government argues that the FinTech market in Poland has ideal development conditions: economic zones, the Constitution of Business, the Constitution of Science will have a positive impact on investments, cooperation between the world of business and science. It will certainly increase competition in this field and if it does not directly affect the Polish entrepreneur, it will certainly receive more credit and investment opportunities on better terms.

Companies not focused on exporting or importing goods and services from Great Britain will benefit from Brexit. It is about development opportunities related to the expected return of Polish citizens. This return will increase the labor market and raise its level of knowledge and skills. As a result, Polish entrepreneurs will have greater opportunities to choose employees and can count on increasing their qualifications. It will mainly apply to such industries as: gastronomy, hotel industry, construction, technical professions (electrics, plumbing, electromechanics), education, and health care.

To sum up, the legal and economic changes related to the UK's exit from the European Union are certainly noticeable for the Polish entrepreneur. Despite the transitional provisions that applied until the end of 2020, 2021 is a new commercial reality for entrepreneurs. It should also be emphasized that the withdrawal of Great Britain from the European Union causes problems in settling transactions with Northern Ireland. In this case, if the subject of sale are goods, the entrepreneur is obliged to settle the transaction as an intra-Community supply or acquisition. On the other hand, when services are sold, Northern Ireland, like Great Britain, is treated as a third country. Such a division may confuse the settlements made by entrepreneurs and cause errors in recognizing transactions in tax records. Therefore, the legislator should issue official clarifications regarding the settlement of transactions between Poland and Great Britain and Northern Ireland as soon as possible.