The Algarve relies on not only UK tourism, but also on the expats that have settled here and who are part of the foundation that many businesses based their concept on. Now after Brexit a lot of companies are feeling the repercussions.

The Portugal News has contacted some of these businesses to see how they are doing just one month after the UK left the European Union.

We talked to John Scott the director of Algarve Removals, an international removals company that provides expats and secondary homeowners the availability to purchase and move items from the UK, Spain and Portugal.

Over the last ten years they have helped with 90,000 removals, but within the last month they have lost all of their business.

John told us about the effect Brexit had on moving used furniture and personal effects with no commercial value. He now has to go through impossible paperwork, his trips take double the time and the costs have risen massively. To transport anything into Portugal people will now have to pay 40 percent VAT and duty charges on entry plus UK and Portuguese customs clearance charges.

“People are treated like commercial value. If we move a family of four, living in a 3-4 bedroom house, they will have a general house contents value of around £25,000. Portugal wants 40 percent VAT and duty on the value, that is £10,000. We only charge £2,500 – £3,000 to do the delivery, that is nearly four times our cost. But now Portugal wants to charge VAT and duty on people’s used personal effects that they have already bought and paid VAT on,” said John Scott.

“This affects so many different people. Moving homes is just a small part of our business, with the online shopping we were moving 1,600 parcels a week. This is now paused until further notice and we are trying our best to resolve this and get the service back up and running. I think people living in Portugal should use local shops to boost the economy here, but for example there is this case where a lady has cancer, her chemo tablets will cost her £2,000 every month to get them delivered. She relies on me to bring it over and now I cannot offer that service anymore. And the firefighters in the Algarve, they rely on donations, so our fire brigade in the UK donate all of their used equipment to the bombeiros and we bring them over for free. This has cost our company thousands and thousands and I was prepared to do this again, because we had a thriving business. I can’t do that in the future. The Algarve relies on tourism and expats, and we are going to drive them away.” John said.

We also talked to Algarve Express, a company with a similar concept, where Rob Francis told us that their business has come to a standstill too, which causes frustrations not only for the company but also for their customers. “Let me give you an example of one of our business clients, they were getting frustrated with us for not shipping the pallets of food they had sent in to our warehouse despite the fact they did not have the necessary licenses in place. They decided to use another company who managed to bring them into Portugal but these goods are now impounded at a bonded warehouse in Lisbon at a cost of £500 per day. It is likely to take some time before their licenses are in place. They advised us that Infarmed cannot even start the process for at least 10 days! They are considering destroying their shipment.”

We asked Rob what would have to happen for the business to thrive again and he told us “firstly an amnesty from the EU / UK Government on the goods that we already hold in our warehouses that we have been trying to ship since 1 January to allow people to gear up for the documentation they are being asked for. Secondly a staggered introduction of the requirements and clear communication of any possible leniencies to the Customs Agents. However we get the general feeling the EU is saying you voted for this, you now deal with it.”

The official source of CTT claimed that “in the first month of Brexit there are no significant impacts on flows with the UK” at the same time admitted though that “postal items are now required to send information enabling them to be cleared through customs in the United Kingdom, either on paper or electronically.”
The situation is similar for items coming from the UK to Portugal although in both cases items containing only documents are exempt from the change in acceptance procedures.

The same source told The Portugal News that “orders containing goods now have to undergo a customs procedure that did not exist before Brexit. Shippers who comply with the new customs information requirements do not experience any major delays with this process, but customers who do not accompany their shipments with the information required by UK customs see extended transit times.”

When asked about additional costs or fees for the dispatch of mail and items, CTT confirmed what Algarve Removals and Algarve Express have told us before. “For international shipments to the UK, postal items containing goods are now subject to VAT, customs filing fee and duty, where applicable. In the case of purchases of goods in the United Kingdom, these will continue to be exempt from charges if they are worth less than €22 (including postage)”, but added that “In the case of mail products, the tax zone where the United Kingdom is located is in Europe and there is no price distinction between EU and non-EU Europe. Brexit has therefore not changed the prices of mail items applicable to the UK and is not expected to have implications for this destination.”

The Portugal News contacted the British embassy in Lisbon for some clarification, where the spokesperson said that they “are aware of some concerns in this respect” but admitted they themselves are still “actively seeking clarification from the Portuguese authorities.”
“We are monitoring closely the implementation of the Trade and Cooperation Agreement signed between UK and EU, and remain committed to minimising the impact of this agreement on people and businesses, and preventing disruption to the normal flow of goods and services between our countries.”

The same source ultimately also advises “anyone/any business that feels affected to also seek clarification of their doubts from the relevant Portuguese authorities, ie Autoridade Tributária (tax and customs), the Economy Ministry or the Foreign Ministry.”
So while CTT appears to not be overly concerned by the recent changes and further need of clarification, companies like Algarve Removals and Algarve Express are struggling to stay afloat and their work is now anything but business as usual.

You may also find useful information from the UK government here “Trade with the UK as a business based in the EU”.

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