BCMS Limited
243/1 Constitution Street
Mosta, MST 9052

T: +356 2142-1111
M: +356 9947-5566
F: +356 2141-7118
E: rkg@bcmsltd.com

VAT Update on “hard Brexit” scenario

The United Kingdom has issued guidelines on the VAT treatment of the exchange of goods and services between the UK and the rest of the EU if politicians do not broker a deal for Brexit (hard Brexit).

In the case of a “hard Brexit” the UK has clarified that it intends to retain the VAT System but the following are the main hallmarks of such a scenario:

  1. Goods imported from the EU to the UK will be treated as importations (not intra community acquisitions);
  2. VAT by taxable persons upon importation may be deferred;
  3. Goods from the UK, imported into the EU shall be treated as exports (not intra community supplies);
  4. Distance sales rules to non taxable persons in the EU will no longer apply;
  5. Place of supply rules will remain unchanged for the time being as will the place of supply of “electronic supplied services” by a UK company to another non taxable person (where customer is established);
  6. The “Tour operators margin scheme” will continue in operation;
  7. Although UK taxpayers may continue to claim refunds from other EU member states this is likely to change in the near future (in the case of a hard Brexit and unless this is separately provided for between the UK and the EU);
  8. The EU VAT Number validation service will continue to apply when checking the validity of a VAT Number of a business established in a foreign member state but UK Vat Numbers will no longer feature in this. It is likely that an independent system will be developed by the UK so that UK based VAT Numbers can continue to be validated;
  9. VAT rules relating to UK transactions (domestic) where no other country is involved remains unchanged.

While every effort was made to ensure that the contents  are accurate and reflect the current position at law and in practice, we do not accept any responsibility for any damage which may result from a change in the law or from a different interpretation or application of the local law by the authorities or the local courts.

The information above is intended to serve solely as a guidance and do not constitute or are to be interpreted as professional advice.  Consulting your legal and tax practitioner is recommended in case you wish to take any decision connected to contents thereof.