After the first rejection of the Prime Minister’s Brexit proposal in the UK House of Parliament (January
15, 2019), Theresa May encountered a second defeat on March 12, 2019. As the House now voted that it
does not want to leave the EU without any deal, the chaos is complete.
In the event that not all Member States agree with a delay for a Brexit, the UK will still have to leave the
EU without any deal, a so-called “hard Brexit”.
With only 15 days ahead of us, companies dealing with the UK (and vice versa) can no longer sit and wait for a deal between the UK and the EU 27 on Brexit, and need to consider taking steps to be well prepared.
Below, you will find a checklist which can be useful to prepare yourself for a hard Brexit with the UK :
VAT and Customs
- Purchasing goods from/selling goods to the UK: obtain an EORI number;
- Purchasing goods from the UK: obtain an ET-14000 license to limit the pre-financing of import VAT;
- If you have a UK establishment: consider the Transitional Simplification Procedures (TSP) for deferral of Customs Duties and VAT on import from EU member states, available in the event of ‘no deal’;
- Future import duties on purchases of goods from the UK: determine cash-impact on your margin;
- Services supplied to and/or services received from UK resident entities: change in ERP/Accounting system;
- Obtaining a AEO-license (Authorised Economic Operator) to benefit from certain custom-regulations;
- Chain-transactions involving 3 parties (triangulation), call-off transactions, e-commerce transactions, MOSS VAT return for sales to UK private individuals: consider VAT implications of the regimes and loss of simplifications;
- EU VAT refund of 2018 UK VAT: ask for a reimbursement before March 29, 2019;
- UK contractors are working on Belgian territory (and vice versa): apply for a valid work and residence permit in advance to avoid consequences of any delays;
- UK employers seconding staff to Belgium (and vice versa): determine social security status and benefits due to absence of EU social security regulation;
- Employing staff: verify specific local labour law regulations regarding working time, temporary staff, minimum wage, collective redundancy, temporary / permanent settled status for EU nationals already employed in the UK (and their families);
- UK Secondments to Belgium (and vice versa): check feasibility of local workforce or permanent recruitment instead of secondments;
- Labour cost: review existing reward structures/policies for UK national and EU staff and assess existing operating model viability in light of possible increased labour costs.
International Taxation / Corporate Income Tax
- Cross-border payments of interest / royalties / dividend between Belgium and UK companies: review additional tax impact as EU Directive benefits may no longer be applicable to UK companies;
- Cross-border reorganisations involving UK companies: review additional tax impact as EU Merger Directive benefits may no longer be applicable to UK companies.
- Existing contracts: review (commercial) agreements to assess potential Brexit impact (territorial scope, choice of law, applicable EU-regulations, liability clauses, termination, ...);
- New contracts: consider a Brexit-clause to limit any potential financial or other impact of the Brexit ("material adverse change" clause, renegotiation clause, limitation of liability, ...);
- IP-rights: assess your IP-rights especially if those have been requested on a EU-level;
- Review your data flows and identify where you receive data from the UK or transfer date to the UK;
- Assess necessity of putting in place the necessary legal safeguards measures (Binding Corporate Rules, Standard Model Contract clauses, ...);
- Assess whether your processing operations and policy information documents need updating.
Our colleagues from our Mazars Tax department are happy to discuss with you the potential implications of a "hard Brexit".