The consequences of Brexit on VAT
Is VAT charged on your imports and exports? Do you have to register for VAT in the UK? What changes are in store for your VAT return? This guide addresses the consequences of Brexit on your imports and exports of goods and services, to both individuals and businesses.
Exporting goods
Exporting to private customers (B2C)
You do not have to charge Belgian VAT on sales of goods shipped to Great Britain. As your sales to Great Britain have no longer been considered intra-Community deliveries since Brexit, but rather exports, it will on the other hand be necessary to be able to formally show that the goods have actually left the EU to justify the export exemption. Northern Ireland, meanwhile, has its own status: it is considered part of the EU for deliveries of goods.
A combination of elements (contract, copy of sales invoice, transport documents, etc can provide proof that your goods have left Belgium.). For the Belgian authorities, the most important means of proof is the export declaration.
Your VAT number should be in box 44 of the export declaration, in accordance with customs and VAT legislation.
As far as your VAT return is concerned, sales of goods to your British clients should be reported in grid 47 rather than grid 46. It is no longer necessary to include an intra-Community listing for sales to Great Britain.
On arrival in Great Britain, your goods will, in principle, have to be imported under UK legislation. If you handle customs clearance (i.e. importation) in Great Britain, you will normally have to pay British VAT yourself. This will depend on what has been agreed with your customer/the Incoterms® used. If your client is a private individual, you will probably have to handle all customs formalities yourself, including importation into Great Britain. You will then need to identify yourself for British VAT if you wish to claim a refund of the VAT paid. From 1 January 2021, all claims for British VAT refunds should be submitted to HM Revenue & Customs (HMRC).
From 1 January 2021, regulations will vary according to the value of the goods shipped:
- Goods worth 135 GBP or less
- VAT is not due on importation. The seller should, however, charge his client for British VAT. You will therefore need to find out the VAT rates applicable in the UK and include the VAT rate applied on the invoice. You will also need to identify yourself for British VAT and deliver your VAT return each quarter, which will be paid to HMRC.
- The most common VAT rate in the UK is 20% for most goods and services. The VAT rates applied can be consulted on the UK government website: https://www.gov.uk/guidance/rates-of-vat-on-different-goods-and-services.
- If you do not wish to take care of these administrative formalities yourself, our agents can do so for you.
- Please note that these rules do not apply to goods subject to excise duty or to non-commercial shipments between private individuals.
- Gifts worth 39 GBP or less are exempt from VAT.
- Goods worth more than 135 GBP
- VAT is charged on importation. So that the customer does not pay VAT twice, to both the carrier and the seller, one solution would be for you not to charge your customer for UK VAT. However, as British customers are used to paying prices that include all taxes, there is a risk that they will refuse to pay any further charges when they receive their parcel. To avoid this, you could charge VAT to the customer and take the lead by acting as an importer and paying import tax to UK customs, which you should then be able to reclaim from the UK Inland Revenue.
Exporting to companies (B2B)
In Belgium, just as with the export of goods to private individuals, the Belgian supplier exports goods exempt from VAT.
In Great Britain, the arrival of goods always constitutes an import, and the VAT treatment depends on the value of the goods sent:
- Goods worth 135 GBP or less
VAT should be paid by the Great Britain VAT-registered customer. - Goods worth more than 135 GBP
The import should be subject to VAT in the UK, in accordance with standard rules.
However, it is important to consult the applicable local regulations for further details.
Exporting services
Exporting services to individuals
If your customer is a private individual (B2C), you should charge Belgian VAT.
In practice, however, there are numerous exceptions to this principle, and so a large number of services supplied to British individuals will not be subject to Belgian VAT. For example, consulting, advertising, research, legal services, etc.
On its website, SPF Finances gives an example: “A taxable person established in Belgium provides an advertising service for a non-taxable person established in the UK. Prior to Brexit, the advertising service was located in Belgium according to the general rule of location at the place of the service provider. Belgian VAT was due. After Brexit, the place of supply of advertising is deemed to be outside the EU (in this case, the UK). No Belgian VAT is due”.
The nature of the services supplied should be analysed in detail in order to determine the applicable VAT rule.
What about your VAT return? If Belgian VAT is applicable, nothing changes for your supplies of services to private individuals in the UK. Depending on the nature of the services in question, if British VAT is applicable, you will now have to include these services in grid 47 of your tax return.
Please note that Northern Ireland is not considered part of the European Union for the export of services. This puts it on the same footing as Great Britain.
Exporting services to companies (B2B)
If your customer is a company (B2B), you do not normally have to charge VAT on your services in Great Britain. Your services to British customers are now considered as exports of services. Unlike goods, there are no customs controls on services.
On your VAT return, you should now include the services supplied to your British customers in grid 47 instead of grid 44.
It is no longer necessary to include an intra-Community listing for the provision of services to Great Britain.
You do not need to identify yourself for British VAT either.
Importing goods
Importing goods for private individuals
- In principle, the British supplier exports goods that are exempt from VAT in the UK, in accordance with British rules.
- The Belgian client imports goods into Belgium
Other specific arrangements may nevertheless apply: the seller may, for example, be designated as an importer in Belgium under the terms of the contract or the Incoterms® used.
Importing goods to companies
The import of goods scheme also applies to the supply of goods from Great Britain to businesses.
There are, however, a number of possible exemptions from import VAT when, for example, goods are the subject of an intra-Community supply after being imported into Belgium.
For the VAT return, your purchases should now be included in grid 87 of the return, instead of grid 86, if you have an ET 14000 authorisation. The corresponding VAT should be included in grid 56 or 57 instead of grid 55; again, if you have this authorisation.
Importing services for private individuals
When a service is provided by a British operator to a private Belgian individual, this service is located at the place where the service provider is established. In the case of the UK, the service is considered as taking place outside the EU. It is not therefore taxable in Belgium.
However, there are exceptions for certain types of service. Such is the case for telecommunications, broadcasting, television and electronic services, for which VAT is due in the country where the purchase is made by the service provider.
Importing services for companies
Your purchases of services should now be reported in grid 87 of the VAT return instead of grid 88, and the corresponding VAT should be reported in grid 56 instead of grid 55.
For further information or for the specific case of e-commerce, please refer to our explanatory sheet "Brexit and its VAT consequences" as well as our FAQ.
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