VAT - back to import & export?
The tax-related consequences will largely depend on the choices the United Kingdom makes at the legislative level. If the United Kingdom chooses to become a member of the EEA, like Iceland, Norway and Liechtenstein, a major part of EU legislation will simply remain applicable for that country.
An alternative could be to enter into an agreement with the EU, as is the case for Switzerland.
The United Kingdom could also opt to be entirely independent. In any case, however, current national legislation derived from EU legislation will remain in force until it is either modified or abolished by the United Kingdom.
Brexit will lead to a number of specific changes regarding VAT:
- Supplies of goods from Belgium to the United Kingdom will no longer qualify as intra-Community supplies of goods. The reverse situation, so deliveries from the United Kingdom to Belgium, will also no longer be considered intra-Community acquisitions of goods (with payment of Belgian VAT through the VAT declaration). From that point on such transactions will be considered import and export transactions. Supplies of goods will be subject to customs clearance formalities, meaning that import duties and import VAT will have to be paid (with the potential disadvantage of advance financing).
- VAT payers established in the United Kingdom and with activities in Belgium that require Belgian VAT registration will have to appoint an individual VAT representative responsible for related matters.
- Several simplifying measures for transactions with the United Kingdom are in jeopardy, e.g. distance sales, simplified triangular intra-Community transactions, simplifications for consignment inventory or intra-Community contract manufacturing, etc.
- Belgian telecom, radio and broadcasting companies as well as e-commerce companies selling services to private individuals in the UK may have to register for VAT purposes in the UK as the Mini One Stop Shop (MOSS) may no longer apply. The same applies for UK telecom, radio and broadcasting companies as well as e-commerce companies selling services to private individuals in the EU.
- Belgian banks and insurance companies rendering financial and insurance services to the UK may be able to substantially boost their VAT recovery percentage.
- Travelling to the UK would no longer fall under the so-called Tour Operating Margin Scheme (TOMS), reducing the cost for EU travel agencies and turning the UK a more attractive destination.
In short, there are many changes which may have an impact on the daily activities of your company. It is therefore recommendable to follow these evolutions closely and and take the necessary actions.