Will EU customers have to pay tariffs on goods that my business exports to the EU?
As the UK is currently a member of the European Union, this means that EU businesses are able to import goods from the UK without being subject to import duty. If the UK reaches a Withdrawal Agreement with the EU, then this will continue to apply until the end of the implementation period (31st December 2020).
Once the UK leaves the European Union, the level of import duty will depend upon the future trading relationship agreed between the UK Government and the EU which is still subject to negotiation.
The political declaration (released November 2018) setting out the frame work for the future relationship between the EU and the UK proposes zero tariffs, no fees, charges or quantitative restrictions across all goods sectors.
In this scenario, from the 29th March 2019, the UK would revert to World Trade Organisation Rules (WTO) which means that EU businesses would have to apply the same customs procedures to exports to the EU, that are currently used when exporting goods to countries outside the EU. This would result in the UK and the EU trading on non-preferential terms. This means that ‘Most Favoured Nation’ tariffs would apply to imports from the UK. From this point onwards, the EU Common Customs Tariff would apply to goods from the UK.
Will my business have to VAT register in the EU countries we sell goods or services in?
UK businesses currently have to register for VAT in other EU member states if they are selling to a customer who is not registered for VAT in that country and the UK business is responsible for delivery. Under the current rules goods bought within the EU supply chain arrangements known as ‘triangulations’ are zero rated and you do not need to register in the final destination EU country.
This will remain the same until the end of the transition period, if a Withdrawal Agreement is reached.
UK businesses selling their own goods in an EU member state will continue to be required to register for VAT in the EU member state where sales are made. With respect to goods bough under the EU triangulation system, this would most likely end in the system being withdrawn and the UK business would have to register in the final destination EU country. For UK businesses selling services into the EU, the current place of supply rules will continue to apply on the same basis as they do now. However, there are certain circumstances where the rules may change including: digital services, insurance and financial services and the VAT Mini One Stop Shop (MOSS.)
Click here to find out more information on VAT for businesses if there is no Brexit deal.