VAT following Brexit

Following on from Brexit in January 2020, from 1 January 2021 the UK will end its period of being outside of the EU but following EU trade rules.

After this date sales to the EU will termed exports and receipts of goods from the EU will be referred to as imports. This is the same terminology as for transactions with non- EU countries.

The general rule for exports is that the sales will be zero rated.

For imports, UK VAT and duty can be charged at the point of entry to the UK.

Distance Sales rules

The EU distance sales rules applied where goods were sold, generally over the internet, to consumers in other EU countries.

The rules applied where the sales to another EU country were in excess of the prescribed level (either 35,000 Euros or 100,000 Euros). In such cases the UK company was required to register for VAT in the other EU country and charge that countries VAT on the sales made to that country.

From 1 January 2021 the requirement to be registered for VAT in other EU countries will no longer apply and hence sales will become zero rated for UK VAT purposes.

The goods will need to clear customs when they arrive in the EU country and again may have EU VAT and duty charged on them.

This could potentially cause a delay in the supply of goods and additional charges being levied on the customer.

Some EU countries may have low value exemption rules for imports.

Online market places may have a role in administering the charging of VAT.

Imports of goods into the UK from the EU

Goods arriving in the UK will be subject to UK VAT and duty on arrival in the UK. This could cause delay in receipt of the goods.