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Practical Handbook VAT 2021

Brexit

On 31 January 2020 was the effective exit of the United Kingdom from the European Union.

The European Union and the United Kingdom have reached a comprehensive and ambitious agreement on their future relationship.

With regard to the movement of goods, this agreement implies that no tariffs or quotas will be required for goods originating in both parties, although the movement of goods from 1 January 2021, will be subject to customs formalities.

Consequences of Brexit for the purposes of VAT

The entry of goods into the Spanish VAT territory (mainland Spain and the Balearic Islands) from the United Kingdom will be subject to VAT at the time of import by Customs, unless the company opts for deferred payment of VAT.

Goods that are transported from the territory of application of Spanish VAT (the peninsula and the Balearic Islands) to the United Kingdom will be exports, and VAT-exempt.

However, trade in goods with Northern Ireland will be treated in the same way as trade with a Member State under the Northern Ireland Protocol.This treatment does not extend to services.

To avoid double taxation, goods whose transport from the UK to one of the 27 Member States starts before 1 January 2021 and arrive at their destination after that date must be presented to Customs but will not be taxed as an import but as an intra-Community acquisition and will have to be included on form 349.The customs authorities may require the importer to provide proof of the start of transport before 1 January 2021 by means of transport documents.