- A European Business
- Purchasing goods from a UK supplier (B2B)
- Shipping goods from UK into the EU
The main consequence of Brexit on supplies of goods will be the restoration of tax borders between the United Kingdom and the European Union. This will result in the end of the intra-Community rules currently applicable to the movement of goods from the United Kingdom to the EU. The supply of goods by a taxable person in the United Kingdom to a client in the EU which is a taxable person (B2B) will no longer be treated as an intra-Community acquisition of goods the EU but as an import. The import of goods in the EU is in principle subject to VAT when the goods are put into free circulation from a custom’s point of view.
Who will act as importer of the goods?
The person liable to pay VAT at import is the person named as the importer :
- If the EU client takes the status of importer, he/she will be the person liable to pay VAT at import. The supply of goods which is carried out by the supplier in the United Kingdom is considered having taken place outside the Community (i.e. in the United Kingdom). No EU VAT is due on this supply.
- If, on the contrary, the supplier in the United Kingdom takes the status of importer, he/she will be the person liable to pay VAT at import (that is always the case when it concerns a supply with installation or assembly carried out by the supplier or on his/her behalf). The supplier must register for VAT purposes in the EU. The supply of goods that he/she carries out afterwards is considered as having taken place in the EU and the EU VAT is due on this delivery (with or without the application of the reverse charge mechanism depending on the VAT status of the purchaser).
What are the VAT obligations as person liable for the payment of VAT?
If you as a European Business, act as the importer of goods, you must:
- File an import declaration pursuant to the customs rules;
- Pay the VAT due on the importation when the IM-A (import declaration) is validated by the Customs
What is our solution?
The key VAT question linked with Brexit for EU firms purchasing goods from UK suppliers will be at the point of importation: who whill act as the importer of the goods? If you are designated as such, you will have to comply with additional VAT administrative obligations linked with the importation of goods as well as with potential prefinancing of VAT (cash flow issue).
Our firm has however expertise to minimize negative VAT impact linked to importation of goods: VAT exemptions (customs warehouse, scheme 42, etc.), deferred VAT payment, Postponed VAT accounting, etc. The type of solution to be implemented depends on the country where the goods are physically imported.