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Brexit - Supply of goods from Belgium to the United Kingdom

Impact of Brexit on the VAT treatment of supplies of goods from Belgium to the United Kingdom

  • What changes?

    The main consequence of Brexit on supplies of goods will be the restoration of tax borders between the European Union (EU) and the United Kingdom. This will result in the end of the intra-Community rules currently applicable to the movement of goods from the EU to the United Kingdom (*).

    • The supply of goods by a supplier in Belgium to a client in the United Kingdom which is a taxable person (B2B) will no longer be treated as an intra-Community supply of goods but as an export of goods exempt from VAT in most cases, pursuant to Article 39, §§1 and 2 of the VAT Code.
    • The supply of goods by a supplier in Belgium to a client in the United Kingdom which is not a taxable person (B2C) will no longer be subject to the distance selling scheme but will be treated also as an export of goods exempt from VAT in most cases, pursuant to Article 39, §§1 and 2 of the VAT Code.
    • The dispatch or the transport of goods to the United Kingdom for the purpose of a supply with installation or assembly by or on behalf of the supplier should be declared by means of an export declaration.
    • The supply of goods to a traveler, residing outside EU, who carries the goods in his/her luggage to the United Kingdom could benefit from an exemption for export if some conditions are fulfilled (see Commentaire TVA - Chapitre 8 - Section 2 - Titre 2 - Rubrique D for more information in this regard).

    Belgian taxable persons supplying goods in the United Kingdom are in particular advised to familiarize themselves with customs procedures and formalities regarding export of goods.

    (*) See, however, the special status of Northern Ireland.

  • How should I, as a supplier, prove the export?

    To justify the exemption, your business must be able to demonstrate that the goods have actually left the EU.

    This proof can be provided by a set of documents (agreement, copy of the sales invoice, transport and payment documents, customs declaration ...). The most important piece of evidence is the export declaration filed according to the customs rules (see Commentaire TVA - Chapitre 8 - Section 2 - Titre 2 - Rubrique A - Sous-rubrique c for more information about export procedures).

    It must be noted that there are also exemptions for some supplies of services related to the export of goods outside the EU. For the application of these exemptions, the United Kingdom must be considered as territory outside the Community (*) (see Commentaire TVA - Chapitre 8 - Section 2 - Titre 2 - Rubrique B et Section 6 - Titre 3 - Rubrique B for more information about these exemptions). To justify these exemptions, you must also be able to demonstrate that the goods have actually left the EU.

    (*) See, however, the special status of Northern Ireland.

  • What regime will be applied when the goods arrive in the United Kingdom?

    At the arrival of the goods in the United Kingdom (*), they will in principle be subject to an import according to the British legislation. This could result in some obligations in the United Kingdom for the Belgian supplier.

    (*) See, however, the special status of Northern Ireland.

  • What will be my VAT obligations as a Belgian supplier?

    Besides the other details required, you must indicate on your invoice (issued compulsorily or voluntarily) the following mentions (*):

    • « lieu de la prestation en dehors de la Belgique – article 14, § 3 du CTVA » (place of supply outside Belgium - Article 14, §3 of the VAT Code) or a similar mention when it concerns a supply with installation or assembly you have done or which has been carried out on your behalf or,
    • « exempté – exportation »  (exempted - export) or « exempté – article 39 CTVA » (exempted - Article 39 of the VAT Code) or « exempté – article 146 Directive 2006/112/CE » (exempted - Article 146 Directive 2006/112/EC) in any other case.

    The VAT identification number of the client in the United Kingdom must no longer be mentioned on the invoice.

    You will also have to mention the taxable basis of the supply in box 47 of your periodic return related to the period during which VAT has become due.

    Moreover, these supplies must no longer be mentioned in the recapitulative statement of the intra-Community transactions.

    (*) See, however, the special status of Northern Ireland.

  • What about goods shipped to the United Kingdom on consignment, at sight or to be put into storage?

    As regards the goods shipped to the United Kingdom on consignment, at sight or to be put into storage by a taxable person in Belgium, the simplification scheme applicable in some Member States will no longer be applied for the aforementioned transactions since the United Kingdom will no longer be part of the EU. Therefore, the export/import rules will be fully applicable (*).

    The export of goods within the framework of a shipment for storage does not constitute a chargeable event for VAT.

    (*) See, however, the special status of Northern Ireland.

  • What about supplies of goods for which dispatch or transport from Belgium to the United Kingdom will start before the end of the transition period and ends thereafter?

    The Withdrawal Agreement provides that when the dispatch or transport begins before the end of the transition period (set at 31 December 2020) and ends thereafter, intra-Community rules continue to apply.

    Therefore, the supply is considered an intra-Community supply/acquisition of goods or is subject to the distance selling scheme according to the current rules.

    After the end of the transition period, those ongoing movements of goods will, however, have to be presented to customs at the border of the EU and of the United Kingdom. Customs authorities may request the importer to prove, by means of a transport document, that the dispatch or transport started before the end of the transition period.

    The reporting obligations related to these transactions provided for in the VAT Directive, such as submission of recapitulative statements, will still apply.