The European Commission (EC) has published an updated Notice to Stakeholders which covers the UK leaving the EU.
The original document which was published in 2018 has been amended to reflect the latest developments which mainly include the official Brexit on 1 February 2020 and the current transition period, which, as matters stand, will end on 31 December 2020. Until that date, EU law in its entirety applies to the UK
The Notice includes:
- The legal position from 1 January 2021
- VAT rules for cross-border services
- The VAT General Rule
- MOSS
- Refunds of VAT
- Separation provisions of the Withdrawal Agreement
- The supply of other services
- Refund requests relating to VAT paid before the end of the transition period
The Notice states that; “…during the transition period, the EU and the UK will negotiate an agreement on a new partnership, providing notably for a free trade area. However, it is not certain whether such an agreement will be concluded and will enter into force at the end of the transition period”. I think that this is likely to be a charitable conclusion!
The EC advises businesses:
- when they are established in the EU, to familiarise themselves with the rules applicable to services supplied to and received from third countries (which the UK will become from 1 January 2021)
- when they are established in the UK, to examine whether new liability rules will apply to them with regard to their services supplied in the EU
- to take the necessary steps in respect of services covered by MOSS
- consider the changes in the VAT refund request procedures
The Notice does not cover the supply of goods nor digital services themself.
General
After the end of the transition period, the EU rules on VAT for services no longer apply to, and in, the UK. This has, particular consequences for the treatment of taxable transactions in services and VAT.
Businesses need to understand the probable changes and make preparations for a No-Deal Brexit.