SAP and Brexit: What you need to consider now

The UK's withdrawal from the EU on 31st Jan marked the beginning of a transition phase that will last until end of 2020. What comes after that is unclear. Companies should now prepare for all scenarios.

SAP and Brexit - what happens after 2020?

One could have thought that the whole thing was a continuation of the novel "The Neverending Story" by Michael Ende. The United Kingdom's withdrawal from the European Union occupied the EU for more than three years - and an end to the process was long in sight. But with his clear election victory in mid-December 2019, British Prime Minister Boris Johnson has now - at least as far as the execution of the withdrawal is concerned - ensured that the situation is clear. On February 1, Britain left the European Union. But the negotiations with the EU are continuing: in a transitional phase until at least the end of 2020, the EU is now negotiating with Great Britain on what the future relationship should look like.

Accordingly, little will change until then - Great Britain will remain in the EU internal market and part of the customs union until the end of 2020. An important date is 1 July 2020: on this date the British government will decide whether it wants to extend the transition phase beyond the end of 2020. This would be possible by up to two years after the withdrawal agreement. But Boris Johnson has categorically ruled this out. After the end of 2020 - in addition to a theoretically possible extension of the negotiation phase - there could be a free trade agreement between the EU and the UK or the British could leave the EU without an agreement ("no-deal scenario").

In particular, an unregulated, "hard" withdrawal would have considerable consequences for trade: more red tape, more effort and higher costs for companies. But whether with or without a free trade agreement, after 31 December 2020, the United Kingdom is legally a "third country". This means, for example, that customs regulations will apply that have not been in force until now.

Customs duties and controls

At the end of a transitional period, companies will have to comply with various customs formalities, especially in the case of a "hard break".

  • All imports or exports must be cleared (even if the EU and the UK have a free trade agreement).
  • Companies must register with Customs and apply for a UK EORI number (Economic Operators' Registration and Identification Number). Without such a number, no goods can be exported to or imported from the UK in future.
  • In addition, there will be import or export controls because certain goods ("dual-use goods") will in all probability be subject to a licensing requirement in future.
  • apart from this, EU companies may also lose the preferential origin (or customs status) of their products if they use goods imported from Great Britain in their production.

These requirements apply to all companies with relations to Great Britain who export goods to the United Kingdom, maintain an establishment on the British Isles or import preliminary products for their own production from Great Britain into the European Union.

Do you want to know about change requirements in the future? Make it more than 20,000 other SAP users and use our SAP Application Management.

These companies should therefore - if they have not already done so - deal with the consequences of the brexite as soon as possible. They need to take a close look at their IT and SAP systems and use the transition phase for preparations and possible adjustments.

Changes in SAP

Companies that use SAP must adapt to a large number of changes and adjustments in SAP. The following systems are generally affected: SAP ECC, SAP GTS, SAP CRM, SAP S/4HANA and SAP C/4HANA.

SAP has been preparing customers for the changes for a long time and provides appropriate information, updates and patches. Companies should therefore inform themselves regularly about new developments.

The changes to be carried out in the SAP systems specifically concern both the system configuration (country configuration, tax determination, etc.), changes to master data (suppliers, customers, etc.) and changes to reporting (INTRASTAT reports).

Possible changes and requirements are described in detail:

  • Companies must change the country definition in SAP Customizing or the general settings: You must deactivate the "Member of the EU" indicator.
  • Master data fields (for customers or vendors) or configuration data (for company code settings) may need to be updated.
  • Products with a country-specific approval require attention if they have been mapped in SAP - the approvals expire and must therefore be given an end of validity.
  • Adjustments may also be necessary in the area of tax determination - from checking the tax codes for EU companies within the framework of the British tax procedure TAXGB to updating tax-relevant master data (sales tax identification numbers) or with regard to certain customs requirements.
  • Tax reporting is also changing, for example with regard to INTRASTAT declarations. These declarations are the basis for trade statistics in the European Union - and will become superfluous when they are withdrawn.
  • It may even be necessary - from an organizational point of view - to create a more advantageous tax structure with a new branch in Great Britain or to set up a new warehouse (consignment warehouse) in Great Britain - changes that companies can only implement with a long lead time.

The SAP toolbox for foreign trade

With SAP Global Trade Services (SAP GTS), SAP offers a range of solutions to help companies better manage the effects of brexite. SAP GTS offers functions for customs clearance, for controlling export, import, and embargo regulations, and for calculating costs resulting from customs duties on previously duty-free goods.

SAP GTS, for example, enables efficient and centralized collection of all relevant data - from tax numbers to country-specific data. The application also helps companies avoid penalties for breaches of compliance regulations. In addition, the entire customs clearance process can be accelerated, made more efficient, and legally secured. SAP GTS is available as an on-premise or cloud solution.

Matthias Mueller01 1444x1444px

Matthias Müller, Senior Sales Executive

Brauchen Sie Unterstützung bei der Brexit-Bewältigung? Sprechen Sie mich an. Ich helfe gerne weiter.

+49 2241 8845 622

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