August 10, 2020

The World is Gearing up for Brexit

The United Kingdom Brexit transition period is ending on December 31, 2020. Britain will operate completely independently of the EU’s free-trade zone/customs union. In practice, this means that goods travelling between UK and the EU will now pass through a customs border. Biggest changes for North American Companies doing business in the UK include:

  • All movements of goods will become imports or exports, subject to UK or EU import VAT (zero-rated B2B intra-community supplies no longer applies).
  • A U.S. or Canadian company selling in Europe needs to ship directly to an EU country.
  • If you wish to continue selling in the UK you need to split your goods into “UK stock” and “EU stock” and ship to two warehouses (UK for selling to UK customers only and one in EU for customers all over Europe).
  • VAT registration in the European countries where you own stock is necessary. Reporting sales on a regular basis to tax authorities and managing VAT compliance. Euro VAT Refund can:
    • Register your company for VAT
    • File reports and communicate with Tax Authorities on your behalf
    • Manage all the details and teach your company how to account for VAT in multiple countries.
  • EU e-commerce sellers need to register immediately for UK VAT if they are planning on continuing selling to UK consumers.
  • Distance selling thresholds for e-commerce sellers of goods from UK to EU will no longer apply.
  • No cash VAT payment must be made by business importers into the UK customs. A Postponed Accounting import VAT deferral scheme will be in effect. However for businesses exporting out of the UK, many EU country customs will charge VAT as they do not offer this scheme for businesses importing goods from the UK.
  • The UK no longer follows VAT rate rules from the EU VAT Directive; meaning they no longer need to charge a minimum standard VAT of 15% or stick with current 20% standard rate (rate reduction is however highly unlikely). They may also change their reduced VAT rate percentage.
  • UK will no longer have a low-value stock relief. Sellers will now have to declare and pay VAT on all goods and charge VAT at the point-of-sale.
  • Digital services sellers, non-EU businesses using the UK MOSS registration will have to re-register for MOSS in the EU and separately in the UK under a regular VAT return. In other words since the UK will no longer be part of EU Mini One-Stop-Shop, sellers of electronic, broadcast or telecoms services will need to register in the EU and when selling into the UK will also need to register with the UK’s HMRC.
  • Process for trading between Northern Ireland and non-EU countries will continue pretty much as it does today.
  • Also, no change for the movement of goods between Northern Ireland and EU Member States, including Ireland. That means there will be no new paperwork; no tariffs, quotas or checks on rules of origin; nor any barriers to movement within the EU Single Market for goods in free circulation in Northern Ireland.
  • Some changes to movements on goods from Great Britain to Northern Ireland according to the Brexit Northern Ireland Protocol. It means UK authorities apply EU customs rules to goods entering Northern Ireland. Also, there will be no additional process, paperwork, or restrictions on Northern Ireland goods moving to Great Britain. Irish businesses follow the normal process for importing goods into the UK, including submitting customs declarations and paying tariff duties.

While businesses officially have until December 31, 2020, the time to prepare is now as this paperwork normally takes a several weeks and on top of that is affected by COVID delays. Please make sure to plan for these new VAT requirements immediately, so we can provide the required forms for your 2021 plans. Contact us directly at to discuss your options and come up with a VAT strategy.


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