Brexit VAT Treatment of Goods and Services Overview
The Brexit VAT treatment of goods and services impacts cross-border supplies to the UK, VAT refunds for goods, separation provisions under the Withdrawal Agreement, and the Ireland/Northern Ireland Protocol. Changes in VAT regulations and protocols are outlined for businesses and traders within the EU and UK post-Brexit.
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BREXIT VAT Treatment of Goods and Services
Cross-border supplies of Goods to the UK (except for Northern Ireland): Goods brought into the VAT territory of the EU from UK subject to Customs supervision and controls under the Customs Regulation VAT due on importation Goods leaving the EU to the UK treated as exports exempt from VAT From 1st July 2021, a taxable person established in the UK making distance sales of goods to a customer in the EU may use the Import OSS Scheme for goods of an intrinsic value not exceeding 150
VAT Refunds (goods) For refunds claimed by suppliers established in the UK (except for those in Northern Ireland) the arrangements of the 13th Directive will apply from 1st Jan 2021 For refunds claimed by suppliers established in Northern Ireland from 1st Jan 2021, the existing arrangements under the 8th Directive will apply for goods only and the 13th Directive will apply for services Although under the 13th Directive Member States may apply reciprocity, Malta does not apply reciprocity Malta may require a taxable person established in the UK (except for Northern Ireland) to appoint a representative Refunds claimed by Maltese traders from UK under the 8th Directive, for the period up to 31st Dec 2020, may still be submitted through the Maltese Tax Authority Portal under the existing arrangements of the 8th Directive, by the 31st March 2021. Same conditions apply to UK traders claiming a refund from Malta for transactions taking place until the 31st Dec 2020.
Separation Provisions under the Withdrawal Agreement for EU and UK traders Where dispatch/transport from UK (including Northern Ireland) starts before end of transition period and arrives at EU border after 31st Dec 2020 still to be considered as an Intra-community supply from UK to MS or Intra- community acquisition, or B2C supply. However, goods have to be presented to Customs with proof of dispatch/transport. The normal reporting obligations will apply. Where dispatch/transport from a MS to UK takes place before end of transition period and goods are returned in an unaltered state from UK to the EU after the 31st Dec 2020 considered as re-importation and is exempt from VAT For transactions that take place until the 31st Dec 2020, rights and obligations will still apply
Ireland/Northern Ireland Protocol applying from 1st Jan 2021 Regarding transactions involving goods only any reference to the EU includes Northern Ireland and any reference to the UK refers only to Great Britain Taxable persons established in Northern Ireland will have the prefix XI before their number for the purpose of the exemption from VAT on intra-community transactions of goods Transactions involving services are treated as if supplied to or from a third country Transactions involving movement of goods between Northern Ireland and Member States EU VAT rules on goods are applied accordingly i.e. considered as Intra-community supplies or Intra- community acquisitions etc validity of VAT number with XI prefix required Transactions involving movement of goods between Northern Ireland and the other parts of the UK considered as imports/exports
Ireland/Northern Ireland Protocol applying from 1st Jan 2021 Taxable persons established in Northern Ireland will be able to use the OSS for intra-community distance sales of goods to customers in MSs Taxable persons established in the EU may will be able to use the OSS for intra- community distance sales of goods to customers in Northern Ireland Taxable persons established in Northern Ireland claiming refunds from Member States and taxable persons established in the EU claiming refunds from Northern Ireland may continue to use the existing procedure under the 8th Directive UK cannot participate, on behalf of Northern Ireland, in the EU decision making process
Supplies of Services Supplies of services to Customers in UK (including Northern Ireland) by suppliers established in the EU and supplies of services to Customers in the EU by suppliers established in UK (including Northern Ireland) will be treated as being supplied to or from a third country) The place of supply of B2B services supplied by a supplier in Malta to a customer in the UK will be the UK and therefore will not fall within the scope of EU VAT The place of supply of B2B services supplied by a supplier in the UK to a customer in Malta will be Malta and therefore Maltese VAT will be due The place of supply of B2C services supplied by a supplier in Malta to a customer in the UK will be Malta and therefore Maltese VAT will be due The place of supply of B2C services supplied by a supplier in the UK to a customer in Malta will be the UK and therefore will not fall withing the scope of EU VAT
MOSS and OSS Suppliers established in the UK or third country suppliers that chose the UK as the MS of Identification (MSID) will have to switch to the NON-UNION SCHEME Suppliers established in the UK who are also established in a Member State are required to move their MOSS registration to that Member State from 1st Jan 2021, if they still want to use MOSS Suppliers established in a third country or in a Member State who supply TBE services to UK customers can no longer use MOSS UK rules apply to these transactions The above applies also to services that will be included with the extension of MOSS to OSS on the 1st July 2021. If a UK trader does not wish to use MOSS or OSS for his supplies to customers established in the EU, he has to register in all Member States where he supplies his services.
VAT Refunds (services) For refunds claimed by suppliers established in the UK the arrangements of the 13th Directive will apply from 1stJan 2021 Although Member States may apply reciprocity, Malta does not apply reciprocity Malta may require a taxable person established in the UK to appoint a representative Refunds claimed by Maltese traders from UK under the 8th Directive, for the period up to 31st Dec 2020, may still be submitted through the Maltese Tax Authority Portal under the existing arrangements of the 8th Directive, by the 31st March 2021
Separation Provisions under the Withdrawal Agreement for EU and UK traders For transactions that take place until the 31st Dec 2020, rights and obligations will apply for 5 years Amendments to MOSS returns for periods up to 31st Dec 2020, may be effected until 31st Dec 2021 Recapitulative Statements for periods until 31st Dec 2020 shall be submitted by the 31st Jan 2021
