As of February 1, 2020, The United Kingdom (“UK”) has officially left the European Union (“EU”). Both the UK and the EU have agreed the Brexit Withdrawal Agreement (“WA”), including the start of a 11-month transitional period which will come to end on December 31, 2020.
As of 1st of January 2021, new VAT and customs rules will apply for trading between the UK and the EU member states, notwithstanding that, as per today, the UK and EU are still negotiating a Free Trade Agreement (“FTA”) in order to avoid a no-deal Brexit.
Considering the UK leaves the EU VAT rand Customs Union on December 31, 2020, it is important to prepare your business for a (no-trade-deal) Brexit, as the UK becomes in any event a third party country in respect of EU VAT and customs rules.
The most important and key Belgian VAT items in respect of the Brexit resp and/or measures are listed below:
1. Appointment of a fiscal representative for UK business
As of January 1, 2020, taxpayers established in the UK will no longer be eligible for direct VAT identification in Belgium. The UK will need to appoint a fiscal representative, established in Belgium, in order to register for VAT in Belgium. UK entities, registered by means of a direct VAT registration, will be compelled to file a request to change the status to fiscal representative ultimately before March 31, 2021.
2. Economic Operator Registration and Identification (“EORI”) number
UK businesses carrying out transactions on Belgian territory such as import and export, need to have an EU EORI number for customs formalities. Up to the end of this year, the UK business can still use the UK EORI EU import & export requirements. However, it is highly recommended to apply upfront for a Belgian EORI number (or an EUORI number with another EU Member State), that will become operational as soon as the UK becomes a third country and is no longer part of the EU (1/1/2021). UK businesses will be able to use that new EORI number in all EU Member States.
On the other hand, Belgian or other EU member State business that will be engaged in import and export transactions on UK territory after December 31, 2020, will need to request a UK EORI number with the UK tax administration (HMRC).
3. VAT deferment license for UK businesses
As from January 1, 2021, goods imported by UK business on Belgian territory will be subject to Belgian VAT at the time of their arrival in Belgium. The Belgian VAT will need to be settled at the time of importation. However, if the UK business is VAT registered in Belgium (by means of a fiscal representative) the VAT liability on the importation can be postponed if the UK business dispose of an import VAT deferment license (also-called ET14000 license). The license allows the taxpayer not to pay the VAT amount at the time of importation, but to include the import VAT payment in the periodical VAT return that he’s required to file. As refund of the import VAT can be claimed in the corresponding VAT return, the UK businesses can avoid to prefinance the import VAT.
4. UK VAT refund for Belgian (or other EU) VAT payers
Refund of import VAT incurred in the UK up to the end of this year, will need to be claimed before March 31, 2021 via the Belgian INTERVAT portal (8th EU Directive refund procedure). For UK VAT incurred as of January 1, 2021, refund shall need to be claimed by means of the paper-based 13th Directive procedure that actually applies to non-EU businesses.
5. E-commerce of B2C services
VAT on telecommunications services, radio and television broadcasting services and electronic services provided by EU entities in the UK up to 31 December 2020, can still be reported and settled via the Intervat/Mini-One-stop-Shop (“MOSS”) return over the 4th quarter of 2020 (to be submitted by 20 January 2021 at the latest). However, as the UK will no longer be part of the special MOSS scheme as of January 1, 2021. EU businesses will need to register for VAT in the UK when supplying such services.
On the other hand, UK business that want to continue using the MOSS scheme after the Brexit, will need to register for VAT in the one or other EU Member State.
Next to the above, it is equally recommended to validate the settings in your accounting software (to be matched with the change of rules for trading between the UK and the EU) and to review and, if required, amend current commercial agreements with UK clients and/or suppliers.
Our VAT department is ready to assist you with all your questions and requirements in respect of the upcoming Brexit.