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Brexit and VAT consequences

Without a withdrawal agreement with potential transitional arrangements, the United Kingdom will become a 'third country' (non-EU) as of March 30, 2019 at 00:00h (CET). This will have consequences for businesses operating in the UK or from the UK in the field of Value Added Tax (VAT).

As from the withdrawal date, the UK will become a third (non-EU ) country and the EU VAT rules will no longer apply to the UK. That is the reason why we recommend businesses to already start the preparations.

Brexit preparations to consider

  • Dispatches from the UK to EU Member States will be equal to exports to current other non-EU countries, this means no more European Sales Listing and/or Intrastat reporting.
  • Sales of goods to private individuals outside the UK will no longer be taxed under the distance sales rules (same applies the other way around as import will be taxable).
  • Purchases from EU Member States to the UK will be equal to import and taxes like VAT and Customs duties (to be verified for duty deferment licenses) will need to be considered.
  • VAT rates are free and UK can decide to tax products and services with different VAT rates.
  • EU based companies only registered for VAT in the UK might be required to appoint a VAT representative and the other way around UK based companies might be required to appoint a VAT representative in other EU Member States where they are VAT registered as a foreign business.
  • UK businesses have to apply for a refund of VAT paid in the EU Member States (where they are not registered) through the 13th VAT Directive and the same applies for EU based companies incurring UK VAT.
  • Services are liable to VAT under the rules for services to non EU based businesses or private individuals. Listing will be no longer applicable.
  • MOSS registration (for telecommunication, broadcasting and electronic services to consumers in the EU) will no longer apply in the UK and what about the tour operator margin scheme?

Special website UK's withdrawal

The European Commission has launched a website with information about the implications of the UK’s withdrawal from the EU and will update news regularly. Still a lot is unclear without the withdrawal agreement or news on transitional arrangements. But what is clear is that businesses will be facing challenges for VAT Compliance. Which need to be addressed sooner rather than later.

Source: European Commission

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