27 March 2019
The probability of a no-deal Brexit has risen dramatically following recent developments at Westminster. If you are a business that files VAT returns in another EU country, or you buy from or sell goods to the EU, there are steps you should take to prepare for a potential No-Deal.
What you need to do
Firstly, you should find out if your business will require Fiscal Representation to continue trading. A No-Deal will mean the UK is not part of the EU as of 29 March and any UK business without an EU establishment will no longer be considered an EU business. Most EU countries will require a fiscal representative to be identified for UK companies with no EU establishment in order for them to continue to file VAT returns and potentially to trade as a VAT-registered entity in that country. This is with the exception of the following countries: Germany, Ireland, Czech Republic, Netherlands, Latvia, Malta, Luxembourg, Slovakia, where there is no requirement to appoint a fiscal representative.
Fiscal representatives act on behalf of non-resident companies. They must be tax registered and they act as the local representative of the company. In some cases, the fiscal representative might have to take on joint and several liability for any VAT debts due. In other jurisdictions, the fiscal representative does not have to take on this liability but instead provides a local, registered address for the tax authority to visit or correspond with.
So, following Brexit, if you are a UK business, with no fixed establishment in Europe, that files VAT returns in one or more EU member states then you may have to appoint a fiscal representative. The process of doing so can be time-consuming and costly. As long as you request fiscal representation before Brexit, then this will be acceptable for the local tax authorities.
Purchasing goods from the EU
In a No-Deal scenario, if you are a UK business that purchases goods from the EU, you will be required to request a GB EORI number. This can be done online: https://www.gov.uk/eori. Once you’ve received the EORI number you can then request to use Transitional Simplified Procedures (TSP) which will allow all imports from the EU to be treated in a similar way to the reverse charge mechanism on services – import VAT will be paid and reclaimed on the same VAT return.
Selling goods to EU customers
If you are a business that sells goods to EU customers, there are two options following Brexit. The first is that you sell the goods on condition that the customer is required to import them into the EU. This avoids the requirement to account for EU customs and duty and potentially VAT register in the member state where the goods are sold.
The other option is becoming the party responsible for the import of the goods into the EU, paying any relevant import VAT and duty, and potentially charging local VAT in the country of sale. This may require a local VAT registration and we would recommend taking local advice via our UHY network.
If you want any further information on the above, or want to discuss your individual situation, please contact Michelle Dale.