Brexit - VAT in the Netherlands - time to act !

Britain threatens to get into a ‘Brexit deadlock’ with the rejection of the Brexit deal by the British House of Commons on January 15, 2019. There are still several possibilities on the outcome, but what if there will be no Brexit-deal ?

The likelihood is increasing every day that the UK will indeed leave the EU on March 29, 2019. For the levy of VAT (and custom duties) the UK will then qualify as a "third country", which implies a big change. What are the consequences thereof for your business?

If you are a Dutch based enterprise and you do business with the UK, you may be eligible for a subsidy for obtaining (our) professional advice on what the Brexit would mean for your business and how to deal with the tax consequences of the Brexit.

You can apply for a so-call Brexit voucher to partly cover (part of) the costs of this advice. There are some restrictions to the application of this voucher as well as advisory costs that are covered by this voucher. The most important condition is that only small and mid-size businesses located in the Netherlands can apply for this voucher. Furthermore, the Ministry of Foreign Affairs has proposed a maximum budget of € 3,950.000 for the application of these vouchers, and the applications will be judged on basis of their entry date.

Typical VAT topics to think about in the event of a Brexit:

• Transactions from the EU to the UK (and vice versa) will no longer qualify as Intra community supplies. As such suppliers will no longer have to report Intra community supplies in their VAT returns and have to file additional Intra community transactions declarations.
• Since the UK will qualify as a third country, these transactions will qualify as "export" respectively "import". Meaning that VAT and custom duties are due upon importation of these supplies and in addition reporting these supplies in a VAT return and a customs declaration.
• As a consequence these supplies will probably lead to more costs for custom agents and freight forwarders handling your supplies.
• If you are supplying digital services to consumers in the UK, you will no longer be able to use the MOSS system to report these services for VAT purposes. Depending on the value of the total digital services provided to UK consumers, you might need to register for VAT purposes in the UK, and visa versa. UK providers will no longer be able to report these supplies via their UK MOSS registration. They can however choose to register in a EU Member State of their choosing for their MOSS filing to EU customers or alternatively register in each EU Member State where the sales are made.
• Based on the above mentioned changes you will need to adapt and/or make changes in your financial administration.
• Apart from compliance consequences, the Brexit might have some impact on your supply chain and you may have to reconsider your supply chain procedures and policies.