Business community must prepare for Brexit costs

Dutch companies that trade with the United Kingdom will face high costs if the country leaves the European Union without a deal. This conclusion can be drawn from research conducted by KPMG on behalf of two Dutch Ministries (Economic Affairs and Climate Policy, and Agriculture, Nature and Food Quality). The study reveals that import and export costs will increase by at least €387 to €627 million annually - excluding customs duties, VAT expenses and the costs of sector-specific market entry requirements (as yet unknown).

State Secretary Keijzer for Economic Affairs and Climate Policy: ‘Brexit will have major economic consequences, as confirmed by this study, so I advise business owners to start preparing in good time. The government is eager to help, but entrepreneurs will have to do the most important work themselves.’

Additional trade costs

The KPMG study divides the costs for companies into two types: costs due to customs formalities – known as administrative costs – and costs associated with sector-specific market entry requirements. Based on figures from 2016, the Customs Authorities predict that businesses will have to make 752,000 additional import declarations and 4.2 million additional export declarations if Brexit takes place without a deal. This translates into additional costs for customs formalities potentially amounting to anywhere between €78.20 and €126.70 per shipment.

On top of this, companies will face sector-specific costs. A total cost estimate is more difficult to make in this case because different rules apply to each product or service. In order to obtain the best possible picture, six specific case studies have been conducted, for meat, cut flowers, paint, means of communication (mobile phones and routers/modems), fire extinguishers and accounting services. For cut flowers, these specific additional costs are between €120 and €190 per shipment, while paint exporters can expect to pay an additional €250 to €500 per substance per year in registration, packaging and classification costs.

Focus on border checks

The study makes several recommendations aimed at accelerating and facilitating border checks, such as increasing customs capacity, adding more inspection points, introducing a ‘fast lane’ and exploring the possibilities for checks during transport by sea to the United Kingdom. The Ministry of Economic Affairs and Climate Policy and the Ministry of Agriculture, Nature and Food Quality will discuss these recommendations and their feasibility with the relevant inspection authorities. The efforts of all parties involved are aimed at minimising the inconvenience for businesses and ensuring smooth processing of lorries and parcels at the border.