Is Your Ecommerce Ready for Brexit?

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The UK’s impending departure from the European Union has now been delayed until October, coming shortly after leaders agreed to a previous delay of the British exit originally scheduled for 29 March 2019. While much of the details on how this will impact trade and business are still unclear, we are monitoring the situation closely and are prepared to make any necessary changes to continue to seamlessly serve your ecommerce business.

All EU transactions run through our Digital River Ireland or Digital River Germany entities, so we don’t expect to see any challenges in our ability to continue to serve the European market.

As the trade situation evolves between the UK and the EU, we will determine if any specific actions are required to serve the UK marketplace. Digital River has ready options for negotiating any required changes to our trading patterns. We handle commerce in over 240 countries and territories; we regularly and flexibly adapt to changing local conditions and requirements. The post-Brexit UK will be no different.

I. Cash flow & currency

We don’t anticipate any change in the way Digital River pays you for products sold. We are monitoring the fulfiller preparedness requirements as it relates to Brexit, and will make updates, as necessary.

II. Fulfillment & supply chain

We are reviewing all our Digital River partnered supply chain vendors to mitigate potential Brexit outcomes. Additionally, we are working to identify any refinements to our processes that might prove necessary.

Client inventory:

Digital River clients will maintain responsibility for the legal import and export of inventory shipments into either their managed warehouse or Digital River’s managed warehouse, whether in the EU or the UK. Any movements of client inventory (outside the ecommerce platform) between the EU and the UK may require customs processing including documents, duty and tax implications, depending on the Brexit outcome.

In the event you move your inventory fulfillment location, you would need to confirm or change the following on Digital River’s platform: fulfillment links, tax, entity change, pricing display, and any other specifics for your new fulfillment location.

Ecommerce transactions fulfillment in the case of a hard Brexit exit:

Selling to EU from the UK: Shipments from the UK to other EU member countries will be considered cross-border and will require customs documentation. Client managed and Digital River managed fulfillers in the UK need to be aware of the new rules and must be able to create export documentation on behalf of Digital River. Incoterm DAP – shopper will be required to be the importer of record and will need to pay duty and tax upon importation. In addition, some EU member countries may require additional review since they are currently outside Digital River’s current global capabilities for cross-border shipment.

Selling to UK from the EU: Shipments, including returns, from the EU to the UK will need to be handled the same as they are today for other non-EU member countries. Client managed and Digital River managed fulfillers in the EU need to be aware of the new rules and must be able to create export documentation on behalf of Digital River. Incoterm DAP – shopper will be required to be the importer of record and will need to pay duty and tax upon importation.

In both of the above patterns, clients along with Digital River will need to leverage locales/locations that have pricing with VAT excluded for shipments into the UK from the EU or to the EU from the UK.

III. Tax

Selling to EU from the UK: Any client moving inventory to or from the UK from another EU country will have additional duty and tax requirements. We will not need to make any changes to our current terms, so this remains the client’s responsibility.

Selling to UK from EU: All client locales selling products in the EU being fulfilled from the UK also would need to change to VAT exclusive pricing on the sites, and work with Digital River to update their trading pattern as related to tax registration.

If Brexit moves forward with a no-deal agreement, there will likely be tax updates needed on a client-by-client basis. Digital River’s tax team is monitoring any necessary changes and will work with you individually to make necessary tax updates.

IV. Payment processing

Digital River has partnered with each of its global payment partners to ensure there is no impact to payment processing regardless of the Brexit decision. In some cases, additional contracts were proactively signed to prepare for potential Brexit outcomes. These contracts have no impact to your business or your shoppers.

V. Privacy & disclosures

If the UK is no longer part of the EU, any personal data that leaves the EU and enters the UK would likely be considered a cross-border transfer of data.

Today, where data is transferred from the EU to a non-EU country, the European Commission requires that applicable parties agree to Standard Contractual Clauses that outline the handling of data, unless another adequacy mechanism applies. It is not clear whether these clauses will apply to the UK post-Brexit. For example, where Digital River Ireland provides customer data to a client’s UK entity, Digital River will need to work with the client to determine how this data will be transferred cross-border to the client’s UK entity. Digital River is closely monitoring these cross-border data transfer requirements for our clients and other third parties.

Further, the UK will likely finalize its own data protection regulation that could differ from the EU’s General Data Protection Regulation (GDPR). As such, Digital River may need to update the customer transaction flow for UK stores/locales. For example, the current opt-in consent and online privacy policy requirements could change post-Brexit. Additionally, the Terms and Conditions based on changes to tax and trade considerations may need to be updated.

VI. Questions

Please note that this document is a high-level summary of potential Brexit impacts to commerce, and does not cover all its complexities and nuances. As such, if you have any follow-up questions please reach out to your Customer Success Team or Digital River’s Legal and Compliance Department at legal-compliance@digitalriver.com.

 

Disclaimer: This is intended for informational purposes only and not for the purposes of providing legal advice as Digital River is not engaged in rendering legal or other professional advice. As such, this article is not a substitute for the advice of an attorney or other expert. If you require legal or other expert advice, you should contact an attorney or other expert to obtain advice with respect to any issue. Also, the information is current as of February 2019 and this information could change based on additional interpretation and guidance received. Finally, given the complexity of Brexit, this document is meant to be a general overview of the situation rather than outlining all of its complex considerations.