What does the Brexit mean for ecommerce?

Posted by Paul on July 1, 2016

Whether you wanted the UK to Leave or Remain in the EU, the decision has now been made by the UK public and we will leave the European Union in the very near future, unless of course there is some sort of intervention.

While Antropy doesn't have an official stance on the Brexit, I have blogged before on the incredibly ridiculous EU cookie law and the incredibly complex EU digital VAT law.

So, if the UK does indeed leave the EU, will we be free from these nasty bits of legislation?

The EU Cookie Law

In 2012 this EU directive caused us to update our Privacy and Electronic Communications Regulations to force website owners to do a cookie audit and then show a popup that asked users if they were okay with cookies being used. To be clear, cookies are fundamental to how almost all websites work so almost all websites were required to add a nasty popup. If you didn't there was a theoretical maximum fine of half a million pounds.

The ICO were the public body responsible for enforcing this and despite one of the main benefits cited by the Leave Campaign being deregulation, the ICO have already said: "The UK will continue to need clear and effective data protection laws, whether or not the country remains part of the EU." Whether that means the cookie popups will have to stay is at this point uncertain.

The EU VAT Law

From January the 1st 2015, this EU directive meant that whether you were VAT registered or not, you would have to account for VAT register for VAT and pay VAT to the government of the EU country where your digital products were downloaded (although the UK government did provide the VAT Mini One Stop Shop for VAT registered businesses to make this easier).

There are 28 countries in the EU (soon to be 27) with different VAT rates which makes things complex but also knowing the country of your customers is not technically possible. For that reason we were required to record two separate bits of information about the customer's location such as their IP address and their answer to a drop down box of locations they have selected. Of course it's very easy to circumvent this and pay less VAT to a country with a lower rate such as Luxembourg which charges only 15%.

Unfortunately countries outside the EU such as the US and Switzerland still have to pay EU VAT, so it's unlikely that we will be able to avoid it unless the exit negotiations go incredibly well!


One of the most dramatic effects of the Brexit so far is the sharp drop of GBP (£) versus USD ($). Whereas $1 used to cost us around 64 of our pence, now just one Monopoly style $1 dollar bill will cost 75 pence, a massive increase.

Although ecommerce companies don't all buy from the USA, the global currency when buying (from China for example) is USD. This means retailers' margins are going to be squeezed and this may well get passed on to the UK consumer as higher prices.

This particular sword is double-edged though because if you export to the USA, Europe or the rest of the world, you'll receive more GBP back than before.


All in all, it looks possible that the cookie popup will disappear but unlikely that EU VAT on digital products will. While at the time of writing the FTSE 100 has rallied strongly, the British Pound remains sharply down against the US Dollar and down also against the Euro.

While leaving the EU may increase trade with the rest of the world, it may reduce it with Europe. While it may slightly reduce paperwork and red tape in some areas it will probably increase it in others, such as when it comes to travel, work and employment in Europe.

What do you think about the potential Brexit? How do you think it will affect your business? Let us know in the comments!

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