Travel retail associations are seeking clarification from the Irish Government following a report in publication The Journal suggesting the country is seeking to preserve existing duty free rules with the UK in the event of a no-deal Brexit.

Ireland’s Finance Minister Paschal Donohoe reportedly tabled two amendments yesterday as part of the Brexit Omnibus Bill that are due to be published tomorrow, it is understood.

These are said to concern post-Brexit duty free sales at ports and airports and the operation of a VAT Retail Export Scheme between both countries in changes designed to protect Irish Exchequer revenues.

‘NO DUTY FREE MENTION’

Reacting to the report, Frank O’Connell, European Travel Retail Confederation (ETRC) President and Chair of the Irish Duty Free Alliance (IDFA) said in a statement sent to TRBusiness: “The Irish Omnibus Bill on Brexit was published yesterday and does not mention duty free specifically.

“The Journal article refers to two amendments to the Bill, which apparently will be published tomorrow. We have not seen them yet.

“We are obviously very concerned about these reports, given the high risk of a hard Brexit, and will be following up with the Minister’s office today.”

The UK is due to depart the European Union on 29 March, with the future path of Prime Minister Theresa May’s Withdrawal Agreement still unclear as political turmoil in Whitehall continues.

With 30 days to go before the exit, a number of scenarios could play out including a no-deal, second referendum or possible ‘short, limited extension’ to Article 50.

Under current rules, the UK will assume third country status in the eventuality of a ‘hard Brexit’, which in theory will trigger the return of duty free shopping allowances between the EU and UK.

Quite how Ireland’s reported ‘move’ will play out within the legalities of this framework is as yet unclear. This is a question TRBusiness has put to the associations and we’ll bring you further reaction on this aspect as soon as possible.

The European Commission clearly outlined its position on the return of duty free allowances for EU travellers to the UK in November, but TRBusiness understands there are a number of key pieces of legislation on the UK side that still require tweaks to reciprocate the arrangement.  [click here for a detailed report with the ETRC.] 

In a notice on travellers between the EU and UK following the withdrawal of the UK from the EU, it stated: “Travellers entering the EU from the United Kingdom carrying goods in their luggage or otherwise with them are entitled to duty free allowances (meaning goods exempt from import duty and VAT, and where applicable excise duty).”

Should the UK government agree a withdrawal deal, a transition period until 31 December 2020 is set to apply, although international media reports at press time suggest the EU could demand a two-year timeframe should the UK decide to delay the entire Brexit process, which would effectively supplant the transition period.

In the case a transition occurs or Brexit is delayed, the return of duty free shopping between the EU and UK will be off the table during the period in question as the UK will effectively remained tied to EU membership.

The IDFA has spoken previously of the sizeable economic opportunity arising from a post-Brexit return of duty free sales on routes between the UK and Ireland, suggesting the restoration could provide a €45m boost to the domestic economy.

“Duty free will have a positive impact on the Irish Exchequer as evidenced by the York report; we have made that clear to the government over the past year and will continue to do so,” commented a source close to the process.

More to follow…