Goods and Services Post-Brexit – Supply Chain Planning

Alex Smith
December 20, 2020

This blog was last updated on June 17, 2021

To help businesses understand the impact of Brexit, we’ve cover the essential considerations for supply chain planning in this blog.

Goods and services in 2021

The treatment of goods moving between Great Britain and the EU will change significantly from 1 January 2021. Exports and imports will apply to GB-EU trade, replacing the concept of dispatches and acquisitions which applies at present. Though zero rating for exports exist if relevant conditions are met, crucially, import VAT and potentially customs duty liability applies to imports. Some Member States allow for accounting import VAT on VAT returns to mitigate this. For postponed accounting applied to B2B transactions, its essential to determine who will act as the importer of record.

For B2C sales, the distance selling regime will no longer apply to UK businesses shipping goods from GB. There is still a requirement for VAT registrations wif the business remains the importer of record. It will become necessary in any Member State without threshold. If the customer acts as importer of record in their own country then VAT registration won’t be necessary, but there could be additional commercial implications to consider in this scenario, as well as an impact on sales.

When it comes to the treatment of services, changes are unlikely. It appears that the UK will continue to apply VAT place of supply rules in line with the VAT Directive, in part to avoid instances of double or no taxation. However, businesses should consider the liability for registration in the EU and the UK on an ongoing basis, and the UK Mini One Stop Shop (MOSS) for supplies of Telecommunications, Broadcasting and Electronic Services (TBES) will no longer be available. Consequently, businesses require a MOSS registration for another Member State.

If new EU registrations are required, fiscal representation will be necessary in many countries. Fiscal Representatives are often jointly liable for the VAT. In addition, this set-up requires further compliance measures, including guarantees.

What next?

Businesses engaging in GB-EU trade of goods must review their supply chain and be fully aware of the implications of Brexit related changes in the New Year. Many businesses may find that it’s possible to make changes to their supply chains to mitigate any negative impacts by changing contractual relationships and reconsidering the flow of goods. It is essential to do these reviews, but must be done now for full effectiveness.

Take Action

Keen to know how Brexit will impact your VAT compliance obligations? Download our recent webinar Brexit and VAT: Protect your valuable supply chains and minimise costly disruptions to find out more:.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Alex Smith

As a Director and member of the Consulting Services team within Managed Services, Alex has worked at Sovos since 2012. At Sovos Alex specialises in providing cross-border advice to a wide range of businesses delivering detailed analyses, reports and contract reviews regarding VAT/GST systems within the EU and beyond. Alex supports many businesses both from a consulting perspective and also by overseeing their VAT compliance obligations. Alex has worked in Indirect Tax since 2005 and his previous experience comes from working in the Big 4. Prior to joining Sovos, Alex worked as a GST consultant in New Zealand, which gave him the opportunity to develop an understanding of international GST and customs duties. Alex also spent several years in London, working in a middle markets VAT team gaining wide exposure to European VAT law. Alex is a full member of the Chartered Institute of Taxation and additionally holds a Master’s degree in Taxation.
Share this post

Hungary Supplemental Insurance Premium Tax
EMEA IPT
July 11, 2022
Extra Profit Tax: An Introduction to Supplemental IPT in Hungary

This blog was last updated on October 28, 2024 Update 7 October 2024 by Edit Buliczka Hungarian Tax Office Updates IPT Declaration Form for 2023 The procedure necessary to correct an underdeclared premium figure in Hungary can be complicated. The complexity of a correction for return form 2320 has become even more challenging. Following a […]

E-Invoicing Compliance EMEA VAT & Fiscal Reporting
November 1, 2024
New ViDA Proposal Set for ECOFIN Approval

This blog was last updated on November 1, 2024 The Council of the European Union has released a new proposal regarding the VAT in the Digital Age (ViDA) reform. The proposal aims to modernise and streamline VAT systems across the EU, notably e-invoicing and Continuous Transaction Controls (CTC). Members States will review it on 5 […]

what is peppol
E-Invoicing Compliance North America
October 29, 2024
What it is PEPPOL?

This blog was last updated on October 29, 2024 Peppol E-invoicing explained: What it is and how it works The global adoption of electronic invoicing is accelerating. Governments worldwide are pushing to adopt e-invoicing to digitally transform their national systems and, often, to close the VAT gap. While many countries have introduced their own e-invoicing […]

remote sellers sales tax
North America Sales & Use Tax
October 28, 2024
Will Congress Act to Simplify Remote Seller Sales Tax Collection

This blog was last updated on October 29, 2024 When the United States Supreme Court ruled in 2018, that South Dakota’s law imposing sales tax collection requirements on sellers without in-state physical presence was constitutional, it did not grant states free reign. States are still responsible for ensuring that their sales tax requirements are manageable, […]

dtc shipping laws for craft spirits
North America ShipCompliant
October 23, 2024
Why It’s Time to Reform DtC Shipping Laws for Craft Spirits

This blog was last updated on October 23, 2024 While wine lovers have enjoyed the convenience of direct-to-consumer (DtC) shipping for nearly two decades, the craft spirits market is still not afforded the same access. Outdated and restrictive spirits shipping laws have kept the spirits industry from fully leveraging the benefits of DtC shipping, leaving […]

reporting unclaimed property
North America Unclaimed Property
October 21, 2024
Three Key Reminders for Businesses Reporting Unclaimed Property

This blog was last updated on October 21, 2024 Unclaimed property compliance is one of those legal obligations that often flies under the radar for many businesses, especially smaller ones. However, failing to stay compliant can quickly turn minor oversights into major liabilities. In many cases, the penalties far exceed the value of the property […]