The United Kingdom (“UK”) has officially exited the European Union (“EU”) as from the 1st of February 2020. However, a transitional period from 1st of February 2020 up to 31st of December 2020 is applicable.

That means that any transactions made with persons established in the UK during the transitional period, will be treated for VAT purposes as per the applicable legislation currently in force until the 31st of December 2020.

Therefore, any intra-Community transactions (acquisitions/despatches/triangular transactions), the receipt or provision of services, and the provision of telecommunications, radio, television and electronic services (TBE services), will be treated as per the current VAT legislation, up to the end of the transitional period.

It is also worth noting that the Tax Department has issued on the 3rd of February 2020 an announcement clarifying the VAT treatment of on-going movements of goods from the UK to the Republic as from the 1st of January 2020. It specifically stated that any transport of goods of which the dispatch or transport from the UK to the Republic started before its withdrawal from the EU (01st of January 2021), and has not been completed before that date, at the time of their arrival at the Republic they will be considered as importation to the Republic.

Unless any further extension will apply to the agreed transitional period, the above guidance will be applicable as from 1st January 2021.

What the future holds?

All taxable persons concerned, need to carefully consider the VAT impact that Brexit has on their business, and make the necessary planning and arrangements so as to comply with possible new VAT requirements applicable to their business.

Brexit will affect your company if:

  • it sells goods or buy goods services to/from the UK, or

  • it provides of receipts services to/from the UK, or

  • it moves goods through the UK

Considerable VAT implications as from 1st January 2021:

  • Goods which enter the VAT territory of the EU from the UK or are dispatched or transported from the VAT territory of the EU to the UK, will respectively be treated as importation or exportation of goods in accordance with Council Directive 2006/112/EC.

  • The provision or receipt of services will be treated as provided or received from a third country for VAT purposes.

  • Taxable persons established in the UK, wishing to use the Mini One-Stop Shop or MOSS, who supply TBE Services to non-taxable persons in the EU, will have to be registered for the MOSS in a Member State of the EU.

  • Taxable persons established in the UK purchasing goods and services or importing goods subject to VAT in an EU Member State who wish to claim a refund of that VAT, may no longer be eligible to file the relevant application for refund electronically in accordance with Council Directive 2008/9/EC, but they have to claim in accordance with Council Directive 86/560/EEC (Arrangements for the refund of VAT for taxable persons not established in the Community territory).

  • A company established in the UK carrying out taxable transactions in a Member State of the EU, may be required by that Member State to designate a tax representative as the person liable for payment of the VAT in accordance with the VAT Directive.