VAT Alert : postponement n°3 Brexit - What next?
The Brexit has yet again been postponed whereby the ultimate deadline has been set on the 31st of January 2020. The current EU Council President, Donald Tusk calls it a "flextension" since it allows the UK to leave the EU on the 1st of December or the 1st of January if they agree on the exit-deal. In the meantime there is standstill situation.
The EU only accepted the extension under the condition to not renegotiate the terms of the current exit-deal. This causes three possible options:
1. There is a "soft" Brexit, with a deal between the UK and the EU before the 31st of January 2020
If the UK and the EU can agree on a Brexit-deal, there will be a transitional period during which the Member States get the chance to prepare for the Brexit. The transitional period would last at least until the end of 2020 and will ensure the application of the customs law between the UK and the rest of the EU (customs Union).
2. Hard Brexit / NO-deal Brexit on the 1st of February
The possibility still exists that there will be a hard, no-deal Brexit on the 1st of February. The European Commission already issued a request towards EU businesses to prepare for a NO-deal Brexit. In case of a hard Brexit all businesses should consider the following recommendations (especially for businesses operating in and through Belgium):
- Appointment of a fiscal representative in Belgium by UK taxpayers;
- Request Belgian EORI-number for customs formalities, since the UK EORI-number will no longer be valid in Belgium (and other EU Member State);
- Apply for a ET-14000 license in order to limit the pre-financing of VAT on Belgian import;
- File a request for foreign UK VAT refund before the exit of the UK;
- Take the necessary precautions to change the accounting software;
- Reviewing and amending current commercial agreements with UK clients and/or suppliers.
3. Other options
Of course there are other options regarding the Brexit case that are less likely to occur (but in the current "Brexit"-environment, one never knows…), such as:
- The Brexit-deadline gets postponed once more;
- A second referendum is organised;
- There is no Brexit;
- The Brexit-deal is renegotiated;
In the meantime, it looks like the UK is heading for a general election on the 12th of December 2019. The outcome of these elections could of course influence the "flextension". We will update you on this matter once we have more information.