BDO warns German companies about pitfalls with tariffs and social security law

January 12, 2021

Regardless of all the relief from the BREXIT trade and cooperation agreement, the BREXIT team of experts from BDO sees new challenges for German companies, particularly with regard to customs regulations and social security law.

Attention is particularly required with the customs regulations. The messages “no customs duties” published in the general reporting are not correct. By no means every product that is imported into the EU from the UK and vice versa is duty-free. Because, as usual with free trade agreements, only those goods are not subject to customs duties that have their preferential origin in the country of the respective contracting party. Goods originating in China, for example, are still subject to the so-called third country tariff.

Importing and exporting companies are therefore well advised to check their internal control systems now at the latest to ensure that their goods origin and preference system are set up correctly. Anyone who gives false indications of origin runs the risk of being involved in tax evasion.

The new social security regulations have also posed challenges for German companies since January 1, 2021. Not only are there no room for maneuver for foreign assignments because transitional regulations only apply to so-called “old cases”, ie people who were already in a cross-border situation up to the day before. Even more important is the fact that since the beginning of the year the new agreement no longer provides for the possibility of exceptional agreements in the case of “new cases”, which is a noticeable disadvantage for many companies according to previous practice.

It is still unclear whether the agreement between Germany and the United Kingdom on social security from 1960 can be used with regard to such exceptional agreements, or whether further new regulations can still be expected. In general, the agreement contains numerous regulations for “new cases” (e.g. for secondments and so-called multiple employment), the applicability of which must be carefully examined in detail, especially since some areas of social security were excluded.

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