Brexit UK remains in EU VAT regime till Dec 2020

Wed 20th Jun 2018

The European Commission and UK Brexit negotiators have confirmed that the UK will remain in the EU VAT regime until the end of the 19-month Brexit transitions period. Brexit is currently scheduled for 29 March 2019, meaning the UK exits the EU VAT system on 31 December 2020.

The details were provided on 19 June in an update of negotiations under Article 50 TEU on the UK’s withdrawal from the EU. It updates the progress made at19 March on the draft Withdrawal Agreement.

As a result, the EU VAT Directive rules on cross-border transactions will still apply. This includes:

  • Nil rating of B2B cross border goods sales
  • Distance Selling threshold relief still in place for small e-commerce businesses
  • Final VAT Refunds under the existing 8th Directive must be submitted by 31 March 2021
  • MOSS VAT return facility for reporting VAT on electronic services from other member states

Other areas of co-operation between the UK’s HMRC and EU tax authorities will be extended further, including:

  • Cooperation on tax fraud under Council Regulation (EU) No. 904/2010 will continue until December 2024
  • The collection and application of excise duties for goods moved prior to December 2020
  • Mutual assistance until December 2025 on collection of taxes due prior to December 2020
  • Access to historical UK VAT registration status on VIES until December 2024

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