Brexit - Supply of services
Impact of Brexit on the VAT treatment of the supply of services
What changes?
At the end of the transition period, the United Kingdom will have to be considered as a territory outside the EU for the application of the rules related to the supply of services (place of supply, exemption, etc.).
Impact on the supply of transport services in B2B
Brexit will have an impact on the application of the rule of effective use and enjoyment referred to in Article 21, § 4, 1°, of the VAT Code.
According to this rule, the transport of goods and the ancillary services to this transport, located in Belgium on the basis of the general rule, are considered as located outside the Community when the said supplies of services are entirely carried out outside the Community and vice versa. The aforementioned services supplied to a taxable person which will be carried out entirely in the United Kingdom should therefore be considered as located outside the Community.
Example
A taxable person established in Belgium instructs a British transport operator to carry goods from London to Manchester. Before Brexit, the transport is taxable in Belgium according to the general rule in B2B (i.e. the place of taxation is the place where the recipient is located). Belgian VAT is due. After Brexit, the place of supply is considered as being outside the Community (in this case, in the United Kingdom) according to the rule of effective use and enjoyment. Belgian VAT will not be due.
Impact on some supplies of services in B2C
Brexit will have an impact on the place of supply of some services named “intellectual or intangible” (listed in Article 21bis, §2, 10° of the VAT Code).
These supplies are located at the place where the recipient (a non-taxable person) is located when the latter is established outside the Community. Therefore, if these services are supplied to a non-taxable person in the United Kingdom, they will be considered as located outside the Community (i.e. in the United Kingdom). Belgian VAT will not be due.
Example
A taxable person established in Belgium supplies advertising services to a non-taxable person established in the United Kingdom (e.g. an individual). Before Brexit, this supply of services would have been taxable in Belgium according to the general rule in B2C (i.e. the place of taxation is the place where the provider is located). Belgian VAT is due. After Brexit, the place of the supply of services is considered as being outside the Community (in this case, in the United Kingdom). Belgian VAT will not be due.