Tax - VAT

VAT – General

Issue

As of 1 January 2021, the UK is a third country. Therefore,  EU VAT legislation is no longer binding in the UK. It should however be noted that most of the EU VAT-legislation has been transposed into UK domestic law.

Impact

EU case law and legislation is no longer a reliable guide for businesses supplying or purchasing goods and services to or from the UK post-Brexit.

VAT – Intra-Community supplies of goods and services

Issue

As of 1 January 2021, supplies of goods and services crossing the UK–EU border no longer qualify as intra-Community supplies. A specific regime applies for supplies of goods to Northern-Ireland.

The consequences may vary depending on the individual business, but generally they involve increased bureaucracy.

Impact

As the VAT regime for intra-Community acquisitions and supplies will no longer apply, supplies of goods and services from and to the UK will qualify as imports and exports respectively. Businesses will need to comply with customs formalities for goods crossing the UK–EU border.

B2B supplies of services

For B2B supplies of services qualifying under the general localisation rule, the impact of Brexit is rather limited; the general localisation rule provides that B2B services are deemed to be located at the place where the recipient is established. Therefore, services supplied by a Belgian VAT-taxable entity to a UK taxable entity will still be deemed to be localised in the UK. The Belgian supplier would have to issue an invoice without VAT, including the designated wording (reverse charge – art. 44 and 196 VAT Directive). The UK taxable entity will subsequently apply local UK rules, which should generally include self-assessing the UK VAT due on the services received from the Belgian supplier.

For services supplied by a UK supplier to a Belgian VAT-taxable entity, the latter will be required to self-assess Belgian VAT due on the services supplied to it by the UK supplier via its periodical VAT return.

It should be noted that various exceptions to the general localisation rule may apply for specific types of services. 

B2C supplies of services

For B2C supplies of services, the general localisation rule stipulates that the services provided to private individuals or non-VAT-taxable entities are deemed to be localised where the supplier is established. Therefore, when a Belgian VAT-taxable entity provides services that qualify under the general localisation rule to a UK private individual, the Belgian VAT-taxable entity will have to issue an invoice, which will include Belgian VAT.

As with B2B supplies of services, various exceptions to the general localisation rule may apply for specific types of services.

Back to Brexit