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6. februar 2020
3 Minutes
British and European flag. London City in the background.

“Brex-IT” and the expected changes in Microsoft Dynamics

Last weekend did not start like a normal weekend. On the night of Friday to Saturday, Great Britain – or more precisely, the United Kingdom (UK) – left the European Union, after 47 years of membership. But what do the changes caused by Brexit mean for me, as a user of an ERP system such as Microsoft Dynamics? What changes should I make? What changes must I make?

We have received Brexit-related inquiries from many of our customers and many of these questions are still unanswered. Unfortunately, many of these questions cannot yet be answered because they depend heavily on the upcoming negotiations. In this article, we would like to explain what to watch out for.

Brexit – going once: The withdrawal on 31st January 2020

That is only half the truth. On 31st January 2020, the United Kingdom formally withdrew from the EU, as provided for in the EU-UK withdrawal agreement. However, the exit agreement also provides for a transitional phase until 31st December 2020, by which time negotiations on long-term relations between the two parties should be concluded. Until 31st December 2020, the United Kingdom will, therefore, be treated as if it were still an EU Member State. For you, this means, “Nothing is currently changing in Microsoft Dynamics”.

Brexit – going twice: Future vision

Therefore, the legal ramifications of Brexit on the economy are not expected to be felt until 1st January 2021. As the concrete processes and consequences are not yet clear, we cannot present all possible scenarios today. Nevertheless, we can give you a guideline so that you already know what you have to consider in the future.

The United Kingdom will be classified as a third country (non-EU). Depending on the nature of the economic relationships between the companies involved, many system settings change, for example, “Country settings, creditors/debtors VAT classification, etc.”.

Here is an example: a German company sells products (or services) to a British company. Until now, a shipment from Germany to the United Kingdom has been an intra-community delivery. After Brexit, this will be an export delivery to a third country.

For Microsoft Dynamics, this means a change in the debtors’ master data, including the debtor group and the VAT group. In addition, the parameters for the preparation of the EU sales list and Intrastat declarations should be modified, as the declaration obligation will no longer apply.

Similarly, if a German company buys products from a UK-based company, changes to the creditors’ master data must also be made.

Furthermore, the effects on detailed processes in a company must be taken into account; this concerns topics such as consignment stocks, public sales documents, etc. Another important issue will be data protection. It is currently unclear whether the UK will comply with EU data protection regulations and whether this will have an impact on B2B and B2C business relations.

Brexit – sold: Conclusion

These are troubled times. Negotiations between the EU and the UK have begun and results are not yet known. We will follow the issue closely and inform our customers in good time. Our aim is to guide you smoothly through this year’s transition phase and into the “post-Brexit” period. If you have any questions, please contact our consultants for logistics and finance processes.