A Brexit without a deal could make a big difference

A Brexit without a deal could make a big difference

The United Kingdom withdrew from the European Union on January 31, 2020 and the end of the year will see the end of the transitional period in which it will apply the same customs and tax rules and procedures as at the time of EU membership.

However, it is not yet clear what exactly companies with a business relationship with the UK can expect from 1 January 2021.

And British companies that do business in European Union member states. The Niveus Consulting Group concluded that this depends on the outcome of the Brexit negotiations.

According to Erzsébet Antretter, Director of Tax Consulting at the Niveus Consulting Group, Brexit will make a huge difference in the lives of the companies involved even if the EU and the UK have a close and broad partnership in all areas by the end of 2020 regions.

With Brexit, the United Kingdom left the value-added tax and the customs union for the member states of the European Union, thus the transition period ended,

After January 1, 2021, the goods imported from there will be treated as imports from third countries in the member states of the European Union, and the goods shipped to them will be treated as exports.

This will inevitably create new commitments in trade and other relationships between the two parties.

Things to do from January 1 – if agreed

For example, for a company to carry out an activity subject to customs legislation (importing goods into or exporting goods from the Union), it must first clearly define itself to the customs authorities. This will require a Customs Identification Number, the so-called EORI number, which will be required for transactions involving the UK next year.

READ  You can take a sequel to Enola Holmes

• In addition, a customs declaration must be submitted when importing or exporting any goods from the UK or transporting them via the UK. You may also be required to provide security and safety information in addition to the customs declaration.

• It seems clear that in the coming year, transactions between EU member states and the UK will not be reported as within the community but as other countries’ transactions in VAT revenues. However, not everyone believes, as Erzsébet Antretter points out, that because imports are subject to different VAT rules than takeovers within the community, the VAT treatment may change for the entire supply chain.

Photo: Robin Utrecht / MTI / ANP / EPA

Things to do as of January 1 – in case there is no agreement

If an agreement is not reached between the EU and the UK by the end of the year, more significant changes are expected.

• In this case, the UK would not be a third country not only on paper but also in practice, and in addition to these procedures, goods imported from the UK into the European Union (and vice versa) may be subject to customs duties. In addition, some goods entering the European Union from the United Kingdom (and vice versa) may be subject to tariff quotas and import of certain goods may require special permits. Moreover, customs formalities may require a financial representative.

• If the producer uses material from the United Kingdom or is producing there, the goods in question will not be considered “of origin” under the current preferential arrangements of the European Union.

Firms that would significantly increase their import volumes from their UK purchases may wish to inquire in advance with customs authorities about the simplification and facilitation options available.

It may also be advisable to apply for customs clearances, which can be used for customs clearance from your headquarters and only need to be used for periodic returns, the expert suggests.

Given the increased volume of import purchases, it is also worth considering the acquisition of AEO, that is, the status of the Authorized Economic Operator, which is automatically accompanied by the possibility of paying VAT on imports by way of self-taxation.

It might be good news for those involved that while VAT and customs trade companies may face major changes in the coming year,

Until then, income taxes will not be greatly affected by Brexit.

Most of the EU member states, such as Hungary, have concluded an international agreement with the United Kingdom to avoid double taxation. Their application is not affected by whether or not the United Kingdom is a member of the European Union.

Leave a Reply

Your email address will not be published. Required fields are marked *