General info VAT

Brexit’s impact on VAT

The most important consequence for your business, following the change of status of the United Kingdom from EU Member State to third country, will be that the free movement of goods, for which there are currently no Customs or tax procedures between the EU and United Kingdom, will no longer be applied. These procedures will therefore be applied in the future.

As for the VAT regulation, this change of status will have the following consequences for your business.

  • Your sales to clients located in the United Kingdom will no longer be considered as intra-Community supplies but will be considered as exports, which will be in most cases exempted from VAT pursuant to Article 39, par. 1 and 2 of the VAT Code.
     
  • Your purchases from sellers located in the United Kingdom will no longer be considered as intra-Community acquisitions but will be considered as imports.

The following FAQs deal with the main consequences of Brexit regarding the VAT, given the fact that Brexit in a legal way is a fact on 31.01.2020, but in reality will only bear consequences as from 01.01.2021.

  • Effective date of Brexit

    The Brexit date has been fixed on January 31st 2020.

    Then starts a transitional period, which starts at 01.02.2020 and ends at 31.12.2020.

    This transitional period, which only once can be extended with 1 or 2 years – the decision in that regard must be taken before 01.07.2020 – is mainly intended to get to an agreement about the future relationship. During the transitional period the United Kingdom will be no member any more of the European Union, but it will still be bound by the major part of the European acquis, the financial obligations for 2020 and the international treaties of the EU.

    The effects which the Brexit will have as from the end of the transitional period (established at 31.12.2020) are the following.

  • Impact on goods

    Export 

    The differences with the intra-Community system are as follows:

    • It is no longer an intra-Community delivery, it’s an export;
    • The legal basis changes - Article 39bis of the VAT Code becomes Article 39, par. 1.
    • You no longer have to mention the VAT number of your clients located in the United Kingdom on your invoice;
    • You no longer have to submit any intra-Community listing of your sales to the United Kingdom.
    • You must mention the sales of goods to your clients located in the United Kingdom in the grid 47 of your VAT declaration instead of in the grid 46. 

    More FAQ information here “Which will be the impact of Brexit on the VAT processing of deliveries of goods from Belgium to the United Kingdom?”

    Import 

    The differences with the past system are as follows:

    • It does not concern an intra-Community acquisition any more. It is an importation;
    • The VAT at the entry remains due, but must in principle be paid to the Customs authorities;
    • You no longer have to mention your purchases of goods from the suppliers located in the United Kingdom in the grid 86 of your VAT declaration any more. The related VAT must not be mentioned in the grid 55 anymore.

    More FAQ information here “Which will be the impact of Brexit on the VAT processing of deliveries of goods from the United Kingdom to Belgium?”

  • Impact on services

    As for most services in the B2B system (business to business) there is no change.  The place where the service is deemed to have taken place remains unchanged.

    In concrete terms:

    • United Kingdom --> Belgium: the Belgian VAT remains due on services.  You have to pay it by means of your periodical VAT declarations;
    • Belgium --> United Kingdom: your enterprise must not take the Belgian VAT into account.  The “autoliquidation” (reverse charge procedure) must not be mentioned any more.

    The intra-Community listing for services provided to clients in the United Kingdom must not be submitted any more.


    More information about transport of goods
     
    More information about “intellectual and intangible” services

  • Impact on financial and insurance operations

    Brexit will affect the right to deduction of taxable persons in Belgium who carry out financial and insurance operations referred to in Article 44, par. 3, 4° to 10° of the VAT Code and brokerage services or mandates related to these operations (banks, insurance companies, financial institutions).

    Indeed, when the co-contracting party is established in the United Kingdom, it is considered as established outside the European Community. These taxable persons will be able to deduce the VAT charged on the operation and related to it, pursuant to Article 45, par. 1, 4° and 5° of the VAT Code.

  • Impact on the filing of intra-Community statements

    Any Belgian enterprise which, during the period from 01.01.2020 until 31.12.2020 (included), carries out intra-Community operations with taxable persons located in the United Kingdom must mention these operations in its statement(s) of intra-Community operations.  This obligation remains, although on 01.01.2021 (end of the transitional period) the European VIES system will no longer be able to check and to validate the necessary data.

    In order to prove for future checks that your client’s VAT number in the United Kingdom was valid at the moment of the delivery of goods or provision of services, you may do as follows:

    • Take “print screens” from each VIES screen mentioning the consulted and validated data of your client.  Keep these “print screens” during 7 years (and more);
       
    • Ask for the customs declarations for goods arriving after 31.12.2020 at the border with the United Kingdom in order to be exported.
  • Impact on VAT refund

    As from 01.04.2021 you can no longer ask for the refund of the British VAT through VAT-REFUND.
     

    • The application for refund of the British VAT regarding operations as from 01.01.2019 until 31.12.2019 (included) must be introduced at the latest on 30.09.2020 through VAT-REFUND.
    • The refund of the British VAT regarding operations as from 01.01.2020 till 31.12.2020 (included) must be introduced at the latest on 31.03.2021 according to the conditions and the modalities of the Directive 2008/9/EC of the Council of 12.02.2008 (via VATREFUND)
    • As for the refund of the British VAT regarding operations as from 01.01.2021 : the procedures to fulfill in this case will exclusively depend on the British tax administration.

    More FAQ information here: Brexit: which impact on applications for VAT refund?

  • Impact on the obligation of VAT identification

    As from 01.01.2021 – and in practice already from 01.10.2020 -  the taxable persons established in the United Kingdom will no longer be taken into account for a direct VAT identification in Belgium.

    As a taxable person established in the United Kingdom you must appoint a responsible representative located in Belgium if you want to get yourself identified for VAT purposes in Belgium.

    If you already have a direct VAT identification number in Belgium, you must, when Brexit occurs, turn it into an individual VAT identification number while appointing a responsible representative.  In this case you can keep the same number.

    More FAQ information here: Brexit: which impact on obligation of VAT identification?

  • Impact on determining the person liable to pay VAT

    As from 01.01.2021 – and in practice already from 01.10.2020 -  if he/she wants to be registered for VAT purposes in Belgium, every taxable person in the United Kingdom must, before carrying out any taxable operation in Belgium for which he/she has to pay the Belgian VAT, appoint a responsible representative established in Belgium.

    Therefore, as taxable person in the United Kingdom, you can become liable to pay the Belgian VAT when the general regulation or a specific rule of reverse charge to the co-contracting party must be applied.

    The provider of services or the supplier, who is not located in Belgium and with whom you do business transactions, must no longer be identified in Belgium for VAT purposes.

    More FAQ information here: Brexit: which impact on determining the person liable to pay VAT?

  • Impact on MOSS system

    As from 01.01.2022 the United Kingdom will stop being part of the MOSS system and information exchange between the Member States.

    Attention please : only the VAT regarding telecommunications, broadcasting, television or electronic services that you have carried out in the United Kingdom at the latest on 31.12.2020, can be mentioned in and filed via the MOSS declaration regarding the 4th quarter 2020, which must be filed at the latest on 20.01.2021.

    During 2021 and till 31.12.2021 at the latest, corrections can still be filed to previous MOSS declarations (regarding operations of the years before 2021) which have been filed in a Member State regarding services which have been supplied in the United Kingdom until 31.12.2020 at the latest.

    The latest also applies in the reverse way, namely for all the changes to previous MOSS declarations which have been filed in the United Kingdom on 31.12.2020 at the latest and which concern the services supplied in the Member states of consumption.

    Are you a British taxable person and would like to carry on using OSS after Brexit and the transitional period ? To do so, you have to be registered as person liable to VAT in an European Member State.  You will receive an individual identification number that you can only use for MOSS.

    More FAQ information here: Brexit: which impact on MOSS?