How does Brexit affect value added tax?
March 2, 2022 | 40,00 EUR | answered by Lina Sauer
Dear tax consultant,
I am Elvira Köhler, the owner of a small online shop that exports goods both within Germany and to the United Kingdom. With the upcoming Brexit, I am thinking about how the value-added tax for my company will change.
Currently, exports to the United Kingdom are tax-free due to intra-community delivery. However, with Brexit, the United Kingdom will no longer be part of the EU single market, which could have implications for the value-added tax.
I am concerned that in the future, I may have to calculate and pay the British value-added tax, which could mean additional bureaucratic effort and potentially higher costs. Are there also changes in invoicing or reporting requirements?
I am unsure how to prepare my business for these changes and what measures I need to take to continue to operate legally after Brexit. Do you have any recommendations or tips on how I can best adapt to the new circumstances?
Thank you in advance for your support and advice.
Sincerely,
Elvira Köhler
Dear Mrs. Köhler,
Thank you for your inquiry regarding the possible effects of Brexit on the value added tax of your online shop, which exports goods both within Germany and to the United Kingdom. It is understandable that you are concerned about how the new regulations could impact your business.
With the United Kingdom's withdrawal from the EU, it will no longer be part of the EU single market, which means that the VAT regulations will also change. Currently, exports to the United Kingdom are tax-free due to intra-community supply. However, after Brexit, you may now have to calculate and remit British VAT.
It is important to prepare for these changes early on in order to minimize potential bureaucratic burdens and potentially higher costs. One possible measure would be to inform yourself early on about the new VAT regulations post-Brexit and, if necessary, seek external advice to ensure that your business continues to operate compliantly.
There may also be changes in terms of invoicing and reporting obligations. It is possible that you may now have to issue separate invoices for deliveries to the United Kingdom and potentially have additional reporting obligations to the British tax authorities. It is advisable to make the necessary adjustments in a timely manner to avoid legal issues.
My recommendation would be to get in touch with a tax advisor early on to discuss your specific situation and develop individual solutions. Together, you can then take the best actions to prepare your business for the new circumstances.
I hope this information is helpful to you and I am available for any further questions. Thank you for your trust and I wish you success in preparing for the new VAT regulations post-Brexit.
Best regards,
Lina Sauer
