Brexit is coming: UK companies be prepared for Belgian VAT changes
Brexit is coming: UK companies be prepared for Belgian VAT changes
The Brexit is coming closer. The United Kingdom will officially leave the EU VAT scheme on 31 December 2020. Until this date, the transition period applies with the result that the UK can still benefit from the EU VAT scheme. As from 1 January 2021 the new VAT rules will apply as the UK will change from an EU Member State to a third country. The new Belgian VAT rules are listed below to which UK companies must comply if they wish to do business with Belgian companies or private individuals.
· Impact on supply of goods
In a B2B context, the supply of goods by an UK company to a Belgian company will no longer qualify as an intra-community supply and intra-community acquisition. All supplies of goods will be regarded as imports or exports, subject to UK or Belgian import tax and in addition to customs duty.
This implies the following:
- The UK company can no longer apply the simplification rules such as triangular traffic, call-off stock and non-transmissions. All these movements of goods will qualify as export and import. This means that the UK company must register for VAT purposes in Belgium with the appointment of a fiscal representative established in Belgium.
- The UK company must apply for an EORI number in both the UK and the EU in order to declare goods and apply for licenses to the Customs. Such a number leads to time and cost savings because customs can efficiently exchange your data with other countries inside and outside the EU.
In a B2C context, UK e-commerce sellers of goods to Belgian consumers can no longer benefit from the distance selling regime. Due to the loss of distance selling thresholds, the supply of goods will qualify as imports and exports. Such sales will be subject to Belgian import VAT and UK e-commerce sellers will have to register for VAT purposes in Belgium with the appointment of a fiscal representative established in Belgium.
However, goods (with the exception of alcoholic products, perfume, toilet water and tobacco products) imported from the United Kingdom to Belgium will not be subject to Belgian import VAT to the extent that their value does not exceed 22EUR. This threshold in Belgium will be abolished as of 1 July 2021 with the consequence that all imported goods from the UK will be subject Belgian VAT on import, irrespective of their value.
Customs duty relief remains applicable for goods with an intrinsic value not exceeding 150 EUR imported into Belgium, except for alcoholic products, perfumes, toilet waters, tobacco and tobacco products.
Goods movements for which shipment and arrival occur during the transition period are still considered to be intra-Community transactions or distance sales for VAT purposes, provided that it can be demonstrated that the transport began before the end of the transitional period.
Goods dispatched from a Member State to the United Kingdom before the end of the transitional period and returned to the initial vendor in the Member State from which they were dispatched after the end of the transitional period in the same state, are regarded as re-importation of goods which are exempt from VAT, provided that the conditions are therefore met.
We advise UK companies who regularly import goods into Belgium to apply for a ET 14.000 permit (compare with the UK “Postponed VAT Accounting”), with the result that the UK company does not immediately have to pay the VAT due on the import of goods. In that case, the VAT will be shifted to the next periodic VAT return and the VAT deduction of that import VAT can be exercised in the same VAT return. Consequently, the UK company does not have to prefinance the VAT on every import into Belgium.
· Impact on supply of services
Services performed in a B2B context will have only limited consequences. The principal rule regarding the location of the service will remain unchanged, i.e. the place where the recipient of the service is located. Furthermore, the reverse charge will continue to apply.
· Impact on the VAT registration in Belgium
Before doing business in Belgium, UK companies must register for VAT purposes in Belgium with the appointment of a fiscal representative established in Belgium by 31 December 2020 at the latest. However, the Belgian tax authorities can no longer keep up with the influx of applications. It is expected that they will adopt a flexible attitude and still consider applications submitted early in 2021 as timely.
The possession of a mere direct VAT identification will no longer suffice. Thus, if a UK company already has such a direct VAT number in Belgium, this direct number must be converted into a VAT number with the appointment of a fiscal representative established in Belgium. It has already been announced that applications for such switch will be accepted in due time if they are submitted by 31 March 2021 at the latest.. The number will remain the same.
· Impact on MOSS
The United Kingdom will no longer be a member of the Mini-One-stop-Shop (MOSS). Therefore, UK sellers of electronic, broadcast or telecoms (TBE) services to EU consumers will have to register as a non-Union business in any EU Member State of their choice (MOSS non-Union scheme), in order to file their VAT declarations for these TBE services.
As of 1 July 2021, the Mini One Stop Shop will extend to the One Stop Shop (OSS), which has 2 consequences on the VAT declaration for UK companies that carry out economic transactions in Belgium:
- Firstly, the scope of the OSS will be extended from TBE services to all services supplied to consumers in an EU Member State.
- Secondly, UK sellers of goods to consumers in Belgium can file their VAT declarations via IOSS (Import One-Stop-Shop) with regard distance sales of imported goods in consignments with a maximum value of 150 EUR. Goods with a value of more than 150 EUR imported from the UK into Belgium will be subject to the standard import procedure instead.
This means that as from 1 July 2021, companies not established in the EU supplying services to consumers in the EU or distance sellers of imported goods, do not need to register for VAT in each Member State in which their supplies of services take place or to where the goods are shipped. Instead, the VAT due on these supplies can be declared and paid in one single Member State via the OSS non-Union scheme or via IOSS under the conditions mentioned above .
· Impact on VAT refunds
In order to reclaim VAT incurred in an EU Member State after 1 January 2021, UK companies will no longer be able to use the 8th Directive online VAT reclaim system operated via HMRC. As from 1 January 2021, the EU VAT must be reclaimed via the 13th Directive paper-based reclaim process. This requires individual claims to each EU Member State where there is a VAT claim.
Only the claim for Belgian VAT refund related to transactions carried out during the period from 1 January 2020 till 31 December 2020 included which are submitted on 31 March 2021 at the latest via the British VAT Refund application will be processed by the Belgian tax administration according to the actual VAT Refund procedure (VAT Directive 2008/9/EC).
· Impact on the submission of intra-community declarations
As from 1 January 2021, the UK company trading with Belgian companies does no longer have to submit an intra-Community declaration for transactions carried out as from 1 January 2021.
It is important to prepare your company for the far-reaching changes as a result of the Brexit. As a trusted advisor of your company, Van Havermaet can assist you with the application for a Belgian EORI number, the application for an ET 14 000 permit, filing of VAT returns, the application for VAT refunds, as well as the application for a Belgian VAT number by performing as a Belgian fiscal representative for your company. We have extensive experience in guiding companies in the field of VAT, as well as performing as a fiscal representative for foreign companies.
If you have any questions in this respect, please contact Hans Philips.