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The UK has left the EU VAT regime, the Customs Union and the Single Market.
For businesses, this means a series of simplified procedures for customs and VAT management to be abolished. However, an agreement for duty free commerce without some charges was also announced on 24 December 2020.
In this article, we will only focus on VAT in order to explain the situation as briefly as possible.
BREXIT AND BASIC VAT CHANGES
➤ The UK will not have to assume the EU VAT regulations into its own VAT Act. For example, there will be no need to maintain the minimum VAT rate of 15%.
➤ There will be no zero rate VAT for intra-community transactions. All transactions will be considered as imports/exports and they will need to abide by the corresponding (English or EU) VAT regime.
➤ MOSS VAT will no longer be available for businesses with digital services and products. Businesses selling to customers wither in the England or the EU will need to register in the respective country where they provide their services and products. If the buyer is a business, they will need to make use of the Reverse Charge mechanism.
➤ There will no longer a sales threshold for VAT charges and goods will be subject to VAT charges from the very first £ or €, depending on where the goods are being exported to. This means that starting from 1st January 2021, European businesses selling their goods to the English market will have to register for UK VAT. Those already with a VAT number will need to take no further action. Those who do not yet have it will have to apply and register for VAT and submit their periodical VAT return. The same respectively applies for English businesses exporting to the EU.
CLARIFICATIONS
When the transaction is done through Online Marketplace and the product is in England at the time of the transaction while the business selling it is abroad, Online Marketplace will be responsible for paying VAT. For example, A European business sells through Amazon products which are in England. When the product is outside England, the new regulation - The seller charges the customer and pays the periodical VAT to the HMRC.
For B2B transactions, if the purchaser provides a VAT number, the Online Marketplace does not charge VAT but only notifies the customer regarding VAT payment and his obligation to declare the VAT though the Reverse Charge mechanism.The new e-commerce VAT (IOSS) after July 2021
(updated 18/10/2021)
Since July 2021, a new mechanism has been set up to facilitate businesses with regard to VAT bureaucracy in exports to European Union countries. Specifically, the mechanism "Import One Stop Shop" (IOSS) has been created.
In practice, this change means that companies whose total export-shipment does not exceed £ 135 (€ 150) can be registered in the VAT register of only one European country and export to all the others, submitting the VAT periodic only through one country. However, for this purpose, it will be necessary to have a tax representative in some European countries, where in case of UK, there is no such requirements.
For details on which countries require a tax representative and which do not, you can see in the table below:
EU Country | Required Fiscal Representative for UK businesses? |
|---|---|
Austria | Yes |
Belgium | No |
Bulgaria | Yes |
Croatia | No |
Cyprus | No |
Czech Republic | No |
Denmark | Yes |
Estonia | Yes |
Finland | No |
France | No |
Germany | No |
Greece | Yes |
Hungary | Yes |
Ireland | No |
Italy | No |
Latvia | No |
Lithuania | Yes |
Luxembourg | No |
Malta | No |
Netherlands | No |
Poland | No |
Portugal | Yes |
Romania | Yes |
Slovakia | No |
Slovenia | Yes |
Spain | No |
Sweden | No |
UPDATE 17/9/2022
From September 2022, HMRC will change the way it carries out VAT assessments.
In particular, in cases where the received VAT returns indicate that there are inaccuracies, HMRC will send its own assessment - to put it simply, how much you should pay. The HMRC is doing this because they believe that they have the right information to do so without needing traders to send them this information.
It has been known for a long time that businesses are checked in real time for VAT returns through the well-known MTD (Making Tax Digital) system.
The merchant or his agent will receive a notice to settle this subject.
In case of non-settlement, a notice will be issued to the hosts of the online platform through which the merchants trade. The respective platform will then decide how to act to avoid being prosecuted by HMRC for the merchant's VAT debts. This may even include withdrawing permission for merchants to sell on its website.
UPECO provides tax representation services in Greece. For details, please contact us.
For further information regarding VAT in England, click HERE. For detailed consultation and guidance, you can arrange for a Skype Consultation.
Translated / Edited: Apostolia Nestoratou
© 2021 UPECO LTD
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ATTENTION!
This article intends to give only a general informative picture and should not, in any case, be taken as a rule. It is strongly recommended to seek a full and professional guidance specifically for your circumstances before making any decisions.