VAT, EORI number, organic, labeling, PDO: the changes Brexit will bring for Italian wine in the UK

The real effects of Brexit will only actually be evident in the long term. However, the signs from the British market, although fully expected, are still not very comforting, especially following the rush to stock up on Italian wine over the last few months of 2020 - a year that ended with a -6.3% drop, equivalent to 714 million euros. During the first two months of 2021, the Italian statistics institute, ISTAT data analyzed by WineNews, has reported 27.7% drop in shipments (the absolutely worst figure on the main markets), meaning that value plummeted from 85.6 to 62 million euros. In the meantime, the product circulation system from Europe to the United Kingdom and vice versa has become respectively export and import, subjected to the consequent slowdown of the related logistics systems. The analysis/report that the Withers Law Firm has issued titled, “Brexit effect on wine-growing in Italy. Commercial agreements and practices to be reviewed in the new scenario”, written by the lawyers Luca Ferrari and Dr. Laura Carrara, has revealed that the panorama that stands out on the horizon is extremely complicated and has many gray areas as well. Meanwhile, those wine producers who would like to export their wine across the Channel will have to have tax identification with the British Revenue Agency and a VAT registration, as well as requesting and obtaining an alphanumeric EORI code. The good news is that Made in Italy products - including wine - will have a guaranteed preferential tariff treatment, which will prohibit applying duties to “original” products. Nevertheless, starting in January 2022, European wine, including organic wines, will be subjected to an import certificate, better known as model VI-1, and obligatory laboratory tests, according to OIV methods, must be carried out. Furthermore, starting on September 30, 2022, there will also be changes to wine label information. It will become mandatory to indicate the name and address of the importer or bottler operating in the United Kingdom. Finally, wine producers that have applied for Geographical Indication recognition in Europe after December 31, 2020, must remember that they will not have any protection in the United Kingdom.
In light of the recent postponements regarding various regulation applications and the distorted effects related to the current economic-health crisis, it is important to pay very close attention to the evolution of negotiations concerning revising agreements that have been reached with the United Kingdom. As the British ambassador to Italy, Jill Morris, has stated, there is a multi-pronged dialogue with Italy underway, which is aimed at concluding a Bilateral Cooperation Agreement, between Italy and the United Kingdom by the end of this year. In the interim, and since the end of the transition period, the system of product circulation from Europe to the United Kingdom and vice versa has become respectively export and import, subjected to the consequent slowdown of the related logistics systems. Italian exporters interested in non-European Union trade must also apply for tax identification with the British Revenue Agency and VAT registration, among the many tariffs introduced, as well as being obliged to request an EORI alphanumeric code. Moreover, even not having the EORI code alone could result in significant economic losses to the negligent entrepreneur, because the risk entails blocking the goods, a fine and/or seizure of the entire consignment.
Although there are many burdensome procedures in the customs passage, among them there is, however, a preferential tariff treatment guaranteed for Made in Italy products, which prohibits applying duties to “original” products. The Italian exporter who wishes to take advantage of this preferential treatment must present a request to the importer and, under his entire responsibility, issue a certificate stating that the product is "original". This certification must then be attached to the invoice of those registered in the Rex-Register Exporter System database. An alternative to the certification is the request to adhere to the preferential tariff regime, which may be presented “on the basis of the importer's knowledge of the original nature of the product”. Goods that do not meet the requirement of customs origin, on the other hand, will be subject to tariff payments established through the current “Most Favored Nation” standards between the European Union and the UK.
Starting in January 2022, European wine, including organic wine, will be subjected to an import certificate, better known as model VI-1, as well as to laboratory tests that must be carried out according to the methods of the OIV - International Organization of Vine & Wine, and other bureaucratic requirements. The current European legislation on the subject of Organic wine will be recognized in equivalent terms until December 2023, except that on January 1, 2022 European organic wine producers are requested to submit a Certificate Of Inspection. The new regulation framework for information will entail important adjustments for producers, starting on September 30, 2022. As a matter of fact, from that date on, wine labels will have to be changed, as it will be mandatory to indicate the name and address of the importer or bottler operating in the United Kingdom, similar to the US market regulations. The mandatory information includes that the product batch must be indicated in an “easily visible, clearly legible and indelible” manner, and allergens identified using the word “contains”. However, it will be possible while indicating allergens, to omit those used in wine production but not present in the finished product.
The Brexit agreement has specified optional indications for both parties, such as the possibility of requesting that the importer/exporter indicate a minimum shelf life date on products, which due to the addition of perishable ingredients, might mean a shorter shelf life than the customer would normally expect. Another optional indication is a pictogram dedicated to prohibiting drinking alcohol for pregnant women that can be replaced with the following wording, “It is safer not to drink alcohol during pregnancy”. Further, it is also recommended, and therefore not mandatory, to adopt formulas that discourage irresponsible consumption or consumption of alcohol by minors.
The changes on wine labels that this “new” non-EU market has required, signifies that wine companies will have to from now on evaluate how best to transfer the information onto their products. In order to amortize any costs of relabeling the products, before placing them on the market in England, companies will be able to take advantage of the possibility of putting the new mandatory information on supplementary labels attached to the wine container.
The effects of the UK exiting the EU also involve Geographical Indications (PDO, PGI and GST). Producers who have applied for recognition of a GI in Europe after December 31, 2020 will not have any protection in the United Kingdom. Consequently, those producers will have to apply independently for National protection in the UK. In this case, the pros and cons of applying for registration of a GI also under the British regime will have to be weighed, according to the higher protection guarantee this will require. Lastly, the traditional European symbols that were registered before December 2020 will be able to continue to be used also in the UK. However, starting on January 1, 2024 these symbols will have to be accompanied by the United Kingdom’s new National identifications.