Sales tax consequences of Brexit from 01/01/2021
On December 24, 2020, the EU and the United Kingdom agreed on a trade agreement as a result of Brexit. This trade agreement has been in force since January 1, 2021. In the context of Brexit, various VAT and customs law aspects must be observed.
1. Movement of goods / deliveries
After Brexit, the United Kingdom no longer belongs to the Community for VAT purposes, but is to be classified as a so-called third country. As a result, the regulations for intra-community acquisitions according to Section 1a (1) UStG and those for intra-community delivery according to Section 6a UStG no longer apply.
Instead, the trade in goods with Great Britain involves import or export deliveries within the meaning of Section 1 Paragraph 1 No. 4 UStG or Section 6 UStG.
In contrast to intra-Community acquisitions, imports no longer have to be declared in the advance VAT return. Import sales tax is levied by customs and must be reported there accordingly. A declaration in the advance VAT return is only necessary as part of the input tax deduction. The import sales tax paid can be deducted as input tax under the additional requirements of § 15 UStG in accordance with § 15 Paragraph 1 No. 2 UStG.
2. Other services
For other domestic taxable services by a foreign entrepreneur, the following applies after Brexit from January 1, 2021:
If the place of the other service of an entrepreneur based in Great Britain is in Germany, the service recipient of the other service is debtor of the German sales tax according to § 13b Abs. 2 Nr. 1 UStG.
If the place of the other service is in Great Britain according to § 3a UStG, the other service is not taxable in Germany and is therefore not subject to sales tax in Germany.
3. Business identification
For the application of various regulations of the Value Added Tax Act, it must be checked whether the supplier / service provider or recipient of the delivery / other service is an entrepreneur within the meaning of the Value Added Tax Act.
By leaving the EU, British entrepreneurs lose their VAT identification number, so that entrepreneurial status has to be checked elsewhere.
A standardized test procedure is currently not known, so that a corresponding regulation by the tax authorities remains to be seen.
4. Customs law
In the case of cross-border movement of goods with Great Britain, import and export declarations under customs law must be submitted. The trade agreement concluded between the EU and Great Britain regulates extensive exemptions from customs duties for the movement of goods in this context.
A duty exemption should therefore be considered for goods that originate in the other area. This means that goods originating in Great Britain can be imported into the EU duty-free and vice versa. For this, however, appropriate evidence in the sense of a declaration of origin to be submitted is required.
According to Article ORIG. 3 et seq. Of the trade agreement essentially products that were obtained or manufactured entirely in the respective contracting country, as well as products that meet the requirements of Annex ORIG-2 (product-specific rules of origin). It must be checked on a case-by-case basis whether a duty exemption is relevant.
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