Quick Facts: Brexit VAT implications
- The UK agreed a Free Trade Agreement (FTA) with the EU
- The FTA doesn’t impact VAT obligations – it affects duty rates, tariffs etc
- The concept of dispatches and acquisitions will be replaced by exports and imports for trade between Great Britain and the EU since Great Britain is now considered a third country
- Special rules apply for trade between NI and the EU
- Special rules also apply for goods moving between Great Britain and Northern Ireland
- Where there is no postponement or deferment mechanism in place, import VAT becomes an upfront cost to the business
- UK businesses registering in an EU Member State may require fiscal representation
VAT post Brexit: What needs to be done?
Although there is a FTA agreement, many problems remain unresolved. As such, businesses must ensure they:
- Identify all supply chains impacted by Brexit
- Pay special attention to contracts with Delivered Duty Paid (DDP) incoterms
- Determine where companies still need to hold VAT registrations in the EUEstablish if there are any new VAT registration requirements
- Consider customs requirements, such as EORI numbers in the UK and EU
- Plan for changes necessary to meet VAT reporting requirements
- Amend ERP systems as appropriate
- Determine if fiscal representation is needed
Source Sovos
