Brexit VAT: Trading with EU countries


SCENARIO:   Currently, the VAT “intra-community” trading regulations and simplifications apply in that for B2B cross-border trade, VAT is not charged on “acquisitions” from a supplier in another member state nor on sales “despatches” to a EU customer.  Provided the supplier / customer VAT numbers are recorded on invoices and goods leave the territory of the relevant member state within a prescribed time period and shipping documentation is retained, “zero-rating” for VAT applies.

BREXIT EFFECT:  Brexit changes this arrangement.  Trading with EU member states will now constitute “imports” and “exports” and the possibility of import VAT being charged in the destination countries leading to extra costs and increased compliance burdens and delays.  Simplified invoicing arrangements such as “triangulation” or avoidance of VAT registration throughout the EU by a community business registered in one member state will no longer apply to the UK.  There will be relief from Intrastat reporting requirements which will save time and costs unless the UK introduces an exact mirror image of EU VAT law in all areas.  MNCs with UK/EU supply chains as well as UK companies selling or buying goods or services from EU will be affected.


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