As of the end of the transition period (31 December 2020), the EU rules in the field of VAT, and in particular Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State, no longer apply to and in the United Kingdom. This has in particular the following consequences concerning the treatment of taxable transactions of goods and VAT refunds:
I. VAT RULES FOR CROSS-BORDER SUPPLIES OF GOODS
EU VAT legislation provides for different VAT regimes for cross-border
supplies/acquisitions and movements to/from Member States and third countries or territories.
As of the end of the transition period, the EU rules for cross-border supplies and movements between Member States will no longer apply in the relations between Member States and the United Kingdom (e.g. no intra-EU supplies and acquisitions of goods; no distance sales regime for goods to and from the United Kingdom).
Instead, as of the end of the transition period, supplies and movements of goods between the EU and the United Kingdom will be subject to the VAT rules on imports and exports. This implies that goods which are brought into the VAT territory of the EU from the United Kingdom or are to be taken out of that territory for dispatch or transport to the United Kingdom, will be subject to customs supervision and may be subject to customs control.
VAT will be due at the importation in the EU, at the rate that applies to the supplies of the same goods within the EU. VAT will be payable to customs authorities at the time of importation, unless the Member State of importation allows to enter import VAT in the periodical VAT return of the taxable person.
The customs export procedure will be obligatory for Union goods leaving the EU customs territory. First the exporter will present the goods and a predeparture declaration (customs declaration, re-export declaration, exit summary declaration) at the customs office responsible for the place where he is established or where the goods are packed or loaded for export shipment (customs office of export). Subsequently, the goods will be presented at the customs office of exit which may examine the goods presented based on the information received from the customs office of export and will supervise their physical exit out of the EU customs territory.
Goods will be exempt from VAT if they are dispatched or transported to a
destination outside the EU.The supplier of exported goods must be able to
prove that the goods have left the EU. In this regard, Member States generally base themselves on the certification of exit given to the exporter by the customs office of export.
As of 1 January 2021, an optional import scheme will be implemented covering distance sales of goods imported from third countries or territories to customers in the EU up to a value of EUR 150.
As of 1 January 2021, together with the introduction of the import scheme, the current VAT exemption for goods in small consignment of a value of up to EUR 22 will be abolished.
II. VAT REFUND
VAT refunds by Member States to taxable persons established outside the EU are subject to the following conditions:
– the request must be submitted directly to the Member State from which the refund is requested, in accordance with the arrangements determined by that Member State;
– the VAT refund may be subject to a reciprocity condition (meaning that the refund is only permitted if VAT refund is also granted by the third country or territory to taxable persons established in the Member State concerned;
– each Member State may require the taxable person established in a third country or territory to designate a tax representative in order to obtain the VAT refund.
Subject to the Withdrawal Agreement, as of the end of the transition period these rules apply to refunds by Member States to taxable persons established in the United Kingdom.