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Consequences of Brexit on VAT from 1 January 2021

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Goods deliveries

The departure of the United Kingdom from the European Union once the transition period has ended (1 January 2021) means, among other things, that the flow of goods between Spain and the United Kingdom will no longer be considered intra-community operations and will now be subject to customs formalities.

In the case of goods entering the territory of application of Spanish VAT (the peninsula and the Balearic Islands) coming from the United Kingdom, this involves the settlement of VAT at the time it is imported by Customs, unless the company opts for deferred VAT. To do this, VAT must be filed monthly. If the filing period is quarterly, it can be changed to monthly by registering in the Monthly Refund Registry (REDEME). In this case, the company is obliged to comply with the Immediate Disclosure of Information (SII) system.

The gross tax base of VAT when importing is the Value at Customs, adding the following concepts when they are not already included:

  1. Taxes, rights, levies and other encumbrances that accrue at the time of import, other than VAT.
  2. Incidental charges, as well as fees and costs for packaging, transport and insurance that are incurred up to the first place of destination of the goods within the Community.

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.

If the Spanish business delivers goods to individuals in the United Kingdom, the remote sales regime will not be applicable.

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

Movements of goods from the United Kingdom to the 27 Member States when Brexit happens:

To avoid double taxation, goods whose transport from the United Kingdom to one of the 27 Member States begins before 1 January 2021 and arrives at its destination after that date must be presented to Customs but will not be taxed as an import but rather as an intra-Community acquisition, having to be included in the summary statements (form 349 in the case of Spain). Customs authorities may require the importer to provide proof of commencement of transport before 1 January 2021 using transport documents.