VAT on EU Sales after Brexit

Following Brexit on 31st December 2020, the rules relating to VAT for EU sales have changed.  Here’s how…

VAT liability
First we’ll look at ‘export of Services’.  These rules are different to exporting Goods as there is no general VAT relief for the export of services.   Services supplied within the UK may be exempt, zero-rated, standard-rated, or liable to VAT at a reduced rate.

You will need to work out who is liable for the VAT in order to determine how much VAT to charge on your service.  So first establish who is being supplied – Is it a business or a consumer?

The VAT treatment differs slightly for supplying to businesses (B2B) or consumers (B2C).

VAT for business to business services
‘Business to business’ or B2B simply means supplies made from your business to another business.

B2B services must follow existing place of supply (POS) rules.

So, if the POS is in the UK, standard VAT treatment applies. But if the POS is outside of the UK, it’s out of the scope of UK VAT.   Ie.  no UK VAT is chargeable where the place of supply is outside the UK

The general rule is that the service is supplied where the customer ‘belongs’ – either in the UK or outside of the UK. However, there are some exceptions to the following services:

• Land related services
• Transport hire
• Services linked to physical performance (e.g. artistic, cultural)
• Ancillary transport services
• Restaurant and catering
• Passenger and freight transport
• Intermediary services
• And B2C supplies of digital services (more detail later on this).

As is always the case with VAT Rules there is a lot of detail relating to the above exceptions so we would recommend you check the relevant VAT notice to get a bit more information on the specifics. Click the link to HMRC - VAT notice 741

Business to consumer services

‘Business to consumer’ or B2C services can mean you’re supplying to:

• A private individual
• A charity, government department or other body which has no business activities
• A ‘person’ (natural or legal) who receives a supply of services wholly for a private purpose

B2C services must also follow existing place of supply rules in exactly the same way as B2B services.

B2C electronic services

In the case of B2C electronic services, existing VAT MOSS (Value Added Tax: Mini One Stop Shop) users must now register with the non-union MOSS scheme in another EU country. Or alternatively, register for VAT in all countries in which you supply.

It’s important to note that you must register by the 10th of the month following your first supply.


Selling goods to the EU

When selling goods to the EU, you must do so at zero rate – as you would with sales to the US and other countries outside the EU.

To do this, you need to obtain an Economic Operator Registration and Identification Number (EORI number). You may also need to be registered for VAT in an EU country.

If you’re VAT registered, your EORI number will be an extension of your VAT number, but you do need to apply for an EORI number – click this link to complete the online form
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There is a checker online to find out if you are EORI Registered EORI checker.

Buying goods from the EU

You will need to make a customs declaration, or your agent can do this for you.  You must have an EORI number.  Import VAT and duty will be due on all imports over £135. and can be dealt with on your own VAT Return.

You will be able to download a monthly statement which will detail the import VAT (similar to the current C79 form)  Your tax agent will not be able to access this; it can be found in your HMRC Business Tax online account.