Thursday, July 18, 2024
HomeBilateral agreementsThe VAT chapter for European trade post Brexit

The VAT chapter for European trade post Brexit

From 2021, with the official implementation of Brexit and the exit of the United Kingdom from the European Union, companies from European countries will no longer be able to obtain the refund of VAT paid in the United Kingdom and, specularly, companies from the United Kingdom will no longer be able to obtain the refund of VAT paid in European Union countries. However, this is not yet official news and has already been established. Many people in the world of business are asking for specific agreements on the post-Brexit VAT chapter.

Under current legislation, from 1 January 2021, the provisions of Directive 2008/9 on the refund of VAT paid in a Member State other than that of residence will no longer apply to post-Brexit relations with the United Kingdom, but those of Directive 86/560, which regulates relations with countries outside the European Union.

For purchases of goods and services made during 2020, attention should be paid to the fact that the deadline for the submission of applications has been set at 31 March 2021. An earlier deadline, therefore, than the ordinary deadline of 30 September provided for by the directive. Requests submitted by 31 March 2021 must be processed by the competent authorities by 31 January 2022, as after that date access to the IT procedure will be denied. For the avoidance of problems, however, it would be preferable, since it is not precluded, to send the request by 31 December.

Until the end of 2020, nothing will change for companies and citizens interested in trading with the UK before Brexit: EU legislation and procedures on the free movement of persons, services, capital and goods will remain in force in the UK. Only after 31 December 2020, unless otherwise agreed, the United Kingdom will no longer be part of the customs and tax territory (VAT and excise duties) of the European Union. The movement of goods between the UK and the EU will therefore be considered trade with a third country.

Under the harmonised system, the right to a refund of VAT paid by the taxable person in a Member State other than the one in which he is established is based on the same substantive conditions as the right of deduction, since it is a mere method of recovering the tax, which is not actually exercisable for “cross border” purchases. The right to refund is subject to the existence of certain conditions. First, the taxable person must not have a territorial link in the country of refund which would oblige him to register in that country. The refund may not be claimed by a taxable person who, during the relevant period, had in the Member State in which he made the purchases the place of his business or a fixed establishment or, in the absence of a place of business or fixed establishment, his permanent address or usual residence. Where one of these territorial connecting factors exists, the taxable person shall be deemed to be “established” and therefore cannot avail himself of the refund procedure.

For detailed information on post Brexit consultancy forms and the advantages offered by the Maltese Government please contact the Malta Business Agency offices by filling in the following form:


    This article provides general information only and does not replace professional advice in any way. It is recommended to consult a qualified professional before making any important decisions regarding financial, legal or other matters. The author and the publication are not responsible for any errors or damages caused by the use of the information contained in this article.

    Giovanni Guarise
    Giovanni Guarise
    Professional journalist since 2010, over the years as a freelance he has dedicated particular attention to the world of Small and Medium Enterprises, creating in-depth studies and focuses for various newspapers, and collaborating in communication activities for a trade association in Veneto.


    Comments are closed.

    We are memberspot_img

    Related articles

    Malta and Romania sign double taxation agreement

    Discover the details of the agreement on double taxation between Malta and Romania, its benefits for residents and businesses, and the impact on the economies of the two countries.

    ASSOMALTA strengthens the link between Italy and Malta by opening a representative office in Naples.

    Among the objectives of the association, that to make to become the new office of Naples, an operational hub between Italy and Malta, in order to strengthen commercial exchanges and collaborations in the field of the shipping and beyond.

    Strengthening educational ties: Malta and Estonia’s commitment to higher education excellence

    Malta and Estonia are innovating the higher education sector through a collaboration that aims to share experiences and participate in international projects.

    Funding focus
    Discover the news in the dedicated section