The EU’s Directorate-General for Tax and Customs Union has explained how the UK ceasing to be a member of the European Union will impact the customs and value-added tax rules applying to UK businesses and EU firms trading with the UK.
Subject to any transitional arrangement that may be contained in a possible withdrawal agreement, as of the withdrawal date (currently March 30, 2019), the EU rules in the field of customs and indirect taxation (VAT and excise duties) will no longer apply to the UK.
According to new EU guidance on the implications of such, this has the following consequences as of the withdrawal date:
For indirect taxes (value-added tax and excise duties):
- Goods entering 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 the EU VAT Directive. The means VAT must be charged at importation and exports will not be subject to VAT.
- Taxable persons wishing to use one of the special schemes of Chapter 6 of Title XII of the VAT Directive (the so-called Mini One-Stop Shop or MOSS), who supply telecommunications services, broadcasting services, or electronic 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 that purchase goods and services or import goods subject to VAT in an EU member state who wish to claim a refund of that VAT may no longer file electronically in accordance with Council Directive 2008/9/EC but have to claim in accordance with Council Directive 86/560/EEC. Member states may make refunds under the latter Directive subject to reciprocity.
- A company established in the UK carrying out taxable transactions in an EU member state 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.
- The movement of goods which enter the excise territory of the EU from the UK or are dispatched or transported from the excise territory of the EU to the UK will respectively be treated as importation or exportation of excise goods in accordance with Council Directive 2008/118/EC of December 16, 2008, concerning the general arrangements for excise duty. This means, among other things, that the Excise Movement and Control System (EMCS) on its own will no longer be applicable to excise duty suspended movements of excise goods from the EU into the UK, but those movements will be treated as exports, where excise supervision ends at the place of exit from the EU. Movements of excise goods to the UK will therefore require an export declaration as well as an electronic administrative document (e-AD). Movements of excise goods from the UK to the EU will have to be released from customs formalities before a movement under EMCS can begin.
- Goods brought into the customs territory of the EU from the UK or to be taken out of that territory for transport to the UK, will be subject to customs supervision and may be subject to customs controls in accordance with Regulation (EU) No 952/2013 of October 9, 2013, laying down the Union Customs Code. This means, among other things, that customs formalities may apply, declarations will have to be lodged, and customs authorities may require guarantees for potential or existing customs debts.
- Goods brought into the customs territory of the EU from the UK will be subject to Council Regulation (EEC) No. 2658/87 of July 23, 1987, on the tariff and statistical nomenclature and on the Common Customs Tariff. This will result in the application of the relevant customs duties.
- Certain goods which enter the EU from the UK or are leaving the EU to the UK will be subject to prohibitions or restrictions on grounds of public policy or public security, the protection of health and life of humans, animals or plants, or the protection of national treasures.
- Authorizations granting the status of Authorised Economic Operator (AEO) and other authorizations for customs simplifications issued by the customs authorities of the UK will no longer be valid in the customs territory of the Union.
- Goods originating in the UK that are incorporated in goods exported from the EU to third countries will no longer qualify as “EU content” for the purpose of the EU’s Common Commercial Policy. This will affect the ability of EU exporters to cumulate with goods originating in the UK and may affect the applicability of preferential tariffs agreed by the Union with third countries.