What does Brexit mean for your VAT?
The withdrawal of the UK from the European Union has VAT consequences if you do business with British buyers or suppliers. Now that the Brexit is official it is time to outline the new rules.
Selling goods to the UK
As the UK is no longer part of the EU, supplies to UK customers are now export supplies. The concept of intracommunity supplies to UK 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.
If you sell directly to consumers in the UK, VAT is always due in the UK. In principle the delivery conditions determine who is liable to pay VAT, but in case the value of the goods is less than GBP 135 you will have to register for VAT in the UK. Take this into account in your terms and conditions of sale.
When products are collected in the Netherlands by a buyer who is not established in the EU, it is in principle regarded to be a domestic supply. The zero rate does not apply to this. However, this rate can be applied if the supplier can prove that the customer is a business entity and the goods are exported out of the European Union. If this cannot be demonstrated, the tax authorities can impose an additional tax assessment. It is therefore advised to charge Dutch VAT at all times and to correct it afterwards when the requested documents are available to prove that the zero rate can be applied correctly.
Buying goods from the UK
If you import goods you have to file an import declaration and pay the VAT to the Customs authorities. You can prevent this, under conditions, by applying for a so-called Article 23 permit. With such a permit you do not have to pay import VAT to Customs at the moment of import, but you can declare it on your periodic VAT return.
Please note: When importing goods into the EU of the UK customs duties may be due and customs formalities have to be fulfilled. 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 Dutch entity to an entity in the UK are not taxable in the Netherlands. UK 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 us.