Impact of Brexit on VAT for UK Businesses Selling to EU
The withdrawal of the UK from the European Union has VAT consequences if you are based in the UK and trade with EU buyers or suppliers. The new rules are outlined below.
Selling goods to the EU from the UK
As the UK is no longer part of the EU, supplies to EU customers are now export supplies. The concept of intracommunity supplies to the EU customers no longer exists.
After Brexit you always have to deal with the zero rate for export. Please note that the zero rate may only be applied if you can prove the export, for example via an export or import declaration or by transport documents.
In case the goods are imported by you or on your behalf, the supply is considered to take place in the EU Member State of import. You may have to register for VAT in that EU Member State. In case the goods are imported by or on behalf of the customer, the place of supply is where the transport related to the supply starts.
Please note that the rules for e-commerce regarding sales to consumers will change after July 2021, making the supplier liable to EU VAT in case the value of the supply is less than € 150.
Buying goods from the EU to the UK
When importing goods into the UK, customs formalities have to be fulfilled and customs duties may be due. The supply conditions (most of the time INCO terms) determine who is liable to fulfil the formalities.
VAT on services after Brexit
Based on the main rule, services provided to entrepreneurs are considered to take place in the country where the recipient is established (some exceptions are specified in the legislation). This means that services provided by a UK entity to an entity in the EU are not taxable in the UK. EU VAT may be due.
Based on the main rule, services provided to private customers are considered to take place where the service provider is established. Various exceptions to this main rule are applicable.
After Brexit it will also no longer be possible to make use the MOSS scheme for the provision of telecommunications, broadcasting and electronic services.
If you have any questions about how Brexit will impact your VAT, feel free to contact the specialists with Crowe Peak.