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There’s an agreement between Britain and the European Union

  • Publication date: 05.01.2021
  • Update date: 19.10.2022
  • Read in : 3 minutes

January 1, 2021. Britain has left the EU’s single market and customs union and all EU policies. As a result, it lost all the rights and benefits it had as an EU member state and is no longer covered by EU international agreements.

Brexit has become a reality

On January 1, 2021, Britain has left the EU’s single market and customs union and all EU policies. As a result, it lost all the rights and benefits it had as an EU member state and is no longer covered by EU international agreements.

On December 24, 2020, an agreement has been reached between the UK and the European Union. The new “Trade and Cooperation Agreement” has yet to be ratified in accordance with existing rules and procedures, but it was decided at the same time to apply it provisionally from January 1, 2021.

Brexit and VAT settlements

Does this change anything about the changes previously provided from a VAT perspective? The answer is no. January 1, 2021, Britain has definitively left the EU single market and customs union. This means the end of the free movement of people, goods, services and capital from European Union countries. In the case of VAT, this means that the intra-Community rules for the supply of goods and services no longer apply. In addition, B2C sales will no longer be covered by EU rules on distance sales. For vendors, the free flow of goods will come to an end. This means that customs checks and controls will apply to all exports from the UK to the EU and vice versa. It is mentioned in the media that the EU-UK agreement provides for zero tariffs and zero quotas on all goods. However, it is important to note that in order to benefit from these exceptional trade preferences, companies must prove that their products meet all the necessary requirements of the “rules of origin.”

In practice, this means that in order to enjoy duty exemption in the UK, goods must be produced in the EU a, also consist mostly of raw materials from the EU or the UK. Goods imported into the EU and then transported to the UK will be subject to customs duties in the UK because they do not meet the rules of origin.

Summary

While the deal means that there is no hard Brexit in general, from a VAT perspective it does not provide for significant simplifications in VAT settlements. It’s important to be aware of the new regulations and to remember that the EU’s online trading regulations will also change significantly in mid-2021. If you have any doubts or questions about VAT settlements in the UK or perhaps you need help obtaining an EORI number get back to us. We will be happy to help you find your way in the post-Brexit reality.

Adam Grabiński Marketing Manager especially fascinated by digital marketing. With Taxology associated since 2020.