Brexit – Changes in SAP: what do you need to do?
Every failed vote in the House of Commons and each day that passes by increases the probability that we will see a “no-deal Brexit”. No-deal means that no agreements would be in place between the EU and the United Kingdom which means that companies must make preparations for this situation. If the UK leaves the EU without an agreement, the United Kingdom would become a so-called non-member state. Goods could then no longer be imported and exported duty-free between the EU and UK and any movement of goods with the United Kingdom would, beginning with 29 March 2019, be considered an export transaction.
What exact things do you need to prepare for? That depends on your initial situation: normally, only slight changes are necessary for exports to the UK. Companies having their registered office in the UK need to make bigger changes.
Changes in SAP ERP after Brexit
Below, we provide you with an overview of the settings you need to check. If you are already using export management in SAP, no major new settings will be necessary.
Basic settings in SAP Customizing
In SAP customizing, you need to remove the identifier “Member of the EU” in the general settings for the United Kingdom.
In the customizing of foreign trade, you also need to adapt the country-relevant data for the United Kingdom. INTRASTAT messages are only relevant for countries belonging to the European Community, so they will then no longer be relevant for the UK. Since any trade with the UK will, after Brexit, be a trade with a non-member state, i.e. a cross-border movement of goods, an Extrastat declaration will be obligatory.
Check registrations and approvals
If you have products requiring a country-specific approval or registration, they will be null and void from one day to the next (even so-called CE approvals). Many companies map these approvals and registrations in the sales management using the listing/exclusion SAP function. In these cases, a valid-to date must be added to the relevant conditions for listings.
Customs and shipping documents after Brexit
When the UK is no longer part of the EU, customs clearance must follow the process applied for other non-member states. You may than use the papers in export management.
Change of the tax determination
In addition to the changes under customs laws, there are also settings under tax laws that need to be adapted. If the tax ID is automatically determined in the SD sales order, you need to find a different tax ID for your British customers in the future. If the UK exits the European Union without an agreement, any shipment of products and services will no longer be considered tax-free intra-Community transactions, but they will then be export transactions. You must then evidence any tax-free export by submitting the relevant customs documents.
In addition to making the necessary customizing settings and the new set of conditions for tax determination, you will also need to update the master data. That might relate to the customer and supplier master data, but also to factory data.
In addition to this change in the determination of the tax ID, there is another legal requirement from the UK: companies need to transfer their value added tax data electronically to the British tax authority beginning with 1 April 2019. Find out more here! However, this change will occur regardless of an exit with or without a deal.
The determination of the origin of goods will also need to be changed after a hard Brexit. It is, in particular, the declarations of origin that must be adapted for all pre-products from the UK. In the transition phase, it must be verified how to separate, after Brexit, any British goods which were imported prior to the Brexit and are thus of EU origin, since the United Kingdom then has a non-member status.
Other functions and subjects
The above described settings are the minimum requirements to comply with the necessary changes prescribed by law. But, there might be other effects leading to changes in the system. Delayed or longer customs clearing results in later delivery dates which must, in return, be considered in the scheduling of shipments and the disposition parameters.
In addition, it might be sensible for enterprises to establish companies in the UK or outside of the UK. Such a change in the company’s structure requires proper mapping and settings in the SAP ERP system.
But even small regions such as the Isle of Man, Jersey or Guernsey must be checked.
If this change is more difficult for you than expected or if you need more assistance, please do not hesitate to contact us!