Trade in goods and services

Posted on 12 April 2021

Trade in sports-related goods:

Significant volumes of sporting goods, apparel and other merchandise are shipped every day between the UK and the EU. We have already seen that businesses involved in exporting or importing sporting goods have faced significant challenges in terms of delays, paperwork and cost:

  • The TCA has provided for tariff free trade in goods, but there are still customs formalities to comply with. Customs declarations must now be made for all goods imported into the EU from the UK. As for goods coming from the EU into the UK, the UK Government has decided to allow importers to defer their declarations until 1 January 2022.
  • In addition, complex rules of origin apply meaning that only "UK origin goods" can benefit from tariff free trade under the TCA (and vice versa). This is to ensure that e.g. the UK is not simply a conduit for the sale of non-UK goods into the EU in order to avoid tariffs.
  • For example, replica football shirt kits made in Asia and shipped to the UK will now not be regarded as "UK origin goods" when exported to the EU and so will attract a tariff.  This has meant some businesses considering opening EU-based hubs for distribution to EU customers and this will no doubt be a feature this summer when replica kits for season 2021/22 are released.

Trade in sports-related services:

  • Most companies or individuals providing sports services will find they are materially affected by Brexit.  In light of the COVID-19 pandemic, business travel has been severely restricted over the past 100 days.  Sports persons and trainers, coaches and other advisers to the sports industry (including lawyers, accountants and other professionals) as well as those involved in audiovisual and transport services may have already found business travel challenging now that free movement of persons and services has ceased to apply post-Brexit.
  • The lack of any substantial agreement on trade in services in the TCA means that that it may be unlawful to "fly in fly out" to provide certain services in certain EU Member States. This is particularly one to watch for sponsors and athletes – who will often be required under the terms of agreements to attend promotional events outside of the UK on a short-term basis. Business travellers should check visa requirements and any other local restrictions on permitted activities by non-EU business travellers. Even where it is permitted, visas may be required and restrictions placed on the types of activity permitted.
  • Prior planning and a review of applicable local laws will be essential for individuals and teams traveling to the EU who will need to assess the legalities of providing services on a country by country basis. 

Tax:

  • As with most areas of Brexit, there have already been issues that have arisen that were not obvious on 1 January 2021.  For example, we saw that there was an issue in the horseracing world when a trainer based in Ireland had been told that they must pay VAT (or post security) on the value of each horse sent to the UK to race.  This can be reclaimed but can still cause significant cash flow issues if an exemption of some sort is not used. Fortunately for the trainer, it seems as though VAT was not levied but this issue goes to show that there are considerable concerns about the tax position in the UK post-Brexit and a lack of clarity.  It is hoped that similar problems become clearer across different sports and related industries as things develop over the next 100 days and beyond.
  • VAT - In some instances, where companies based in the EU sell to UK customers they have temporarily or permanently suspended sales to UK consumers (a Dutch bicycle parts company made headlines in taking such action).  The point at which VAT is collected is no longer the point of importation (i.e. into the UK) and instead is the point of sale. This has meant HMRC requiring such businesses to register for UK VAT and account for such VAT to HMRC.

Competition Law:

  • UK competition law continues to apply unchanged by Brexit. UK sports businesses should take steps to ensure they are aware of and continue to comply with the rules on anti-competitive agreements and conduct, so as to avoid possible investigations and fines. 
  • The European Commission will still be entitled to investigate and review agreements or conduct entered into by UK teams or professional sporting individuals where they have an effect on competition in the EU (for example the collective selling of rights to broadcast a sports league). With the conclusion of the next Premier League rights deal imminent, regulators will certainly be keeping a close eye on any changes to the existing business model employed by the Premier League (and others in a similar boat).
  • In cases of pan-European cartels or abuses of dominance, there may be parallel investigations with the EU Commission and Competition & Markets Authority both involved.  There will certainly be collaboration between the two to ensure a joined up approach to multi-jurisdictional infringements.

Consumer/Advertising:

  • There are no plans to water down pre-Brexit EU consumer laws, which were and remain part of UK law and nothing in the first 100 days of the post-Brexit era suggests that this is about to change. 
  • When selling products or services to UK or EU consumers, UK sporting companies will therefore still need to continue to comply with the rules on misleading advertising, unfair terms, and rights to refunds. EU laws in these areas have been carried forward into UK law post-Brexit.  Over time, UK consumer law may diverge from EU law and so sports companies may need to consider two sets of rules. 

Product Marking:

  • One issue that will impact those across the sports industry (in particular those designing, manufacturing and selling products and merchandise) relates to the product marking system, which indicates conformity with health, safety and environmental protection standards for certain products.
  • The UK now has a new UK Conformity Assessed (UKCA) regime for goods sold on the GB market (England, Wales and Scotland), replacing the EU CE regime.
  • While the UK Government has provided for a transitional period (until 1 January 2022) during which most products sold in the UK can continue to have the EU CE mark, the new UKCA mark is not recognised in the EU.
  • In addition, some products require the new UKCA marking immediately (e.g. those that require mandatory third party conformity assessment in the UK).

Read more about the impact of Brexit on trade and goods in services.

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