On 24th December 2020, a Brexit deal was finally made, only a few days before the transition period ends on 31st December 2020. What does this deal mean for your business and is your SAP system already set up for the Brexit changes that need to be in place from 1st January 2021?
Latest information on the Brexit deal and the transition period ending on 31st December 2020
Even though the UK already left the EU on 31st January 2020, a transition period until 31st December 2020 was put into place. In this transition period the UK would still follow EU rules and regulations to allow companies to prepare their business for the new Brexit implementations.
At the same time, negotiations on a Brexit deal between the UK and EU took place. With the end of the transition period in sight, many companies already prepared for a Brexit no-deal, as we advised in our blog post earlier this year. However, on the 24th December 2020, a deal was made between the UK and EU. The next steps to complete the Brexit deal include a formally written procedure on the decision on 29th December 2020 at 3pm (CET), and the final votes by the parliaments. The UK Parliament will sit together on 30th December 2020 to vote on the legislation, while the EU parliament will sit together in February or March in the hope the MEPs (Members of the European Parliament) of the 27 member states can meet in Strasbourg for the final votes. The MEPs have also expressed they did not have sufficient time to debate on the deal before the end of the transition period.
The impact of the Brexit deal on businesses
The agreement on a post-Brexit trade and security deal allows for the new arrangements between the UK and EU to come into force on 1st January 2021. For businesses, this means that the worst-case scenario of new tariffs and quotas is avoided, but extra customs paperwork and checks at the border will be required when doing business between UK and EU. Furthermore, the Brexit deal also impacts various business sectors in different ways. Businesses dealing across the UK-EU border will likely still face some more challenges in the upcoming period. To help prepare businesses for Brexit, the UK government has published some helpful guidelines.
With the late publication of the agreement, many businesses are also pleading for a grace period. However, there is no information yet on whether the late Brexit deal will lead to this grace period or not. We do expect a lot of new information and decisions to be announced in the upcoming weeks.
Our team of experts is keeping a close eye on the Brexit updates to make sure we can help your business in the best way possible. If you need any help with adjusting your SAP system to the newest Brexit implementations, feel free to request a web-meeting with one of our Brexit experts.
Is your SAP system prepared for the Brexit changes?
Brexit does not only require changes on a business-process level, but also to your SAP ERP system. In 2019, we already published a blog post with some changes to your SAP ERP system that are required after Brexit.
The advice that we have already published remains unchanged, and action can be taken now to lay the groundwork for the end of the Brexit transition period:
- Customer / Vendor Master Data will need to be adjusted to take Brexit into account (for example, changing reconciliation accounts).
- Adjustments in lead times for materials / services may need to be reflected in material master data for correct production forecasting.
- VAT treatment of transactions between the UK and EU will need to be updated according to local legislation.
SAP also regularly updates their OSS notes with further information on required changes. Our team of Brexit experts keeps track of these notes and changes and we will update our information when necessary.
One of the important changes to your SAP ERP system that requires urgent attention, if you haven’t updated this yet, is the monthly INTRASTAT reporting, as explained in the next paragraph.
Urgent change to INTRASTAT reporting with SAP S/4HANA or SAP ECC after 1st January 2021
INTRASTAT reporting is one of the new legal requirements that must be met before the end of the Brexit transition period. If you haven’t made the necessary SAP coding changes for INTRASTAT reporting yet, you are required to apply them ASAP as this needs to be in order BEFORE the deadline on 1st January 2021.
Because the UK will no longer be treated as a member state of the EU from 1st January on, goods which are moved/delivered from the EU to Great Britain will be treated as “exports” – this means that these processes are no longer relevant for INTRASTAT. However, goods which are moved/delivered to Northern Ireland must continue to be reported as an intra-community movement of goods (and should therefore still be declared via INTRASTAT).
SAP has released a number of OSS Notes which relate to the required INTRASTAT changes. SAP Customers should check the SAP Support Portal for the latest information. In particular, the following OSS notes may be relevant for you:
INTRASTAT with SAP S/4HANA
The following SAP notes must be imported in your SAP S4/HANA system before 1st January 2021:
And before the start of the first INTRASTAT declaration in 2021, the following SAP note must be implemented:
INTRASTAT with SAP ECC
If you are still working with the SAP ECC system, you need to implement the following SAP notes before 1st January 2021:
The special status of Northern Ireland is reflected, among other things, in the country codes. To ensure that the correct country codes are also transmitted, further SAP notes are published that must be implemented before the INTRASTAT function is executed for the first time. We advice you to follow the publications in the SAP Support Portal.
PIKON can help you as a strategic partner to follow up on Brexit updates and required changes to your SAP ERP system
Our team of experts continue to monitor the situation closely so we can advise you on what is needed for your specific business case. We are ready to support and assist our customers with changes that must be made to your SAP system. We combine SAP expertise with detailed knowledge of country-specific legal requirements, backed up with years of project experience.
This combination makes us ideal partners for your Brexit questions. PIKON’s experts in the areas of Finance, Logistics and Legal Requirements are monitoring the Brexit situation in order to plan for various scenarios as they emerge. With our presence in the UK as well as in the EU, we are approaching Brexit from both sides.
If you’d like further information about how PIKON can support your Brexit transition, please ask your question in the comment section or request a web-meeting with one of our Brexit experts.