On 30th January 2018, the European Commission published a notice to stakeholders on the UK's withdrawal from the EU in the field of Indirect Taxation (VAT) and Customs. The purpose of this notice is to remind private parties of the VAT and Customs implications of the UK leaving the single market.
It must be reminded that, once the UK leaves the European Union, it will become a ‘third country’. Consequently, the EU rules in the field of customs and indirect taxation will no longer apply to the UK.
Please see below particular consequences as of the withdrawal date relating to Indirect Taxation (VAT) and Customs.
The movement of goods from and to the UK, from an EU standpoint, will be regarded as respectively ‘import’ and ‘export’ in accordance with Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax. This entails charging VAT at importation, while exports are exempt (zero rated) from VAT.
Taxable persons established in the United Kingdom supplying digital services to EU non-taxable persons, will have to be registered for the MOSS in any Member State of the EU.
Taxable persons established in the United Kingdom claiming VAT refunds, may no longer file their claim electronically but instead submit the claim in accordance with Council Directive 86/560/EEC.
Possible requirement for a designated tax representative by the Member State, when a company established in the United Kingdom carrying out taxable transactions in that EU Member State.
The Excise Movement and Control System (EMCS) will no longer be applicable to excise duty suspended movements of excise goods from the EU into the United Kingdom. Those movements will be treated as exports, where excise supervision ends at the place of exit from the EU.
Whether goods are brought into the customs territory of the EU from the United Kingdom or vice-versa, they are subject to customs supervision and may be subject to customs controls.
Goods which are transported into the EU from the United Kingdom are subject to Council Regulation (EEC) No 2658/87 of 23 July 1987. This implies the application of the relevant customs duties.
Certain goods which enter the EU from the United Kingdom or vice-versa, are subject to prohibitions or restrictions on grounds of public policy or public security, the prohibition of health and life of humans, animals or plants, or the protection of national treasures.
Domestic (England and Wales) legislation implementing authorisations for customs simplifications, will no longer be valid in the customs territory of the Union.
Domestic Goods exported from the United Kingdom will no longer qualify as “EU Content”. As a result, preferential tariff agreements may be applicable by the Union with third countries.
Should you like to further discuss the content and potential impact of Brexit for your business, please contact one of our trusted advisors from the Indirect Tax Department at KPMG Cyprus.
KPMG’s Indirect Tax team provides advice and assistance at the Cyprus and international level. We tailored our advisory work to accommodate your specific business issues. We focus in providing value adding and pragmatic advice rather than just outlining a list of recommendations.
Our tax professionals are qualified to review your company’s current tax position and provide relevant advice and planning on a range of indirect taxes, including VAT, customs duties and excise taxes (such as tax audits, reorganizations and acquisitions, etc.). Furthermore, we can help your company with its administrative obligations and interactions with administrative bodies.