Operating between the United Kingdom and France, and wondering how Brexit changes your VAT obligations? Here are answers to some of the most frequently-asked questions.
When the United Kingdom leaves the European Union (EU) it will become a third country, that is, a jurisdiction outside the EU and also the European Economic Area (EEA). We've discussed the tax implications of a no-deal Brexit and examined how it would change the VAT refund procedure. Now, we answer some frequently-asked-questions that we're receiving about trading between the UK and France.
As Brexit negotiations are ongoing, some of these answers may change in the future. For the most up-to-date information, or to ask a question not listed here, make an enquiry with us.
1. I have a British company with no French establishment, but I am registered in France for VAT purposes; do I need to change my company's VAT number after Brexit?
In the case of a no-deal-Brexit, your company can keep its existing French VAT number.
2. My French company carries out intra-community (IC) transactions with the United Kingdom. What are the consequences of Brexit for me?
If the UK makes a 'no-deal' exit, your intra-community transactions would be re-qualified from IC-acquisitions/IC-dispatches to imports/exports from/to a third State.
Unlike intra-community transactions, imports and exports follow a declarative process at customs. And customs tax and excise are due at the time of import or export of the goods.
Export remains VAT-exempt as long as the company can provide a proof of export. VAT on imports paid at customs would be declared on the VAT return and can be claimed back.
3. My French company has operations that are subject to VAT in the UK, how should I proceed after the Brexit?
If the UK and the EU are unable to reach a deal and the UK makes a 'no-deal' exit, the VAT refund procedure would change immediately.
Currently, VAT on goods and services acquired in France by a company established in another Member State of the EU for the purposes of its economic activity may be refundable. The refund of VAT is subject to conditions related to both the company itself (the company should not be established in France) and to the operations performed (the delivery of goods or services is not located in France) and is facilitated through the EU Directive 2008/09/EC (formerly the 8th Directive).
After Brexit, British companies requesting VAT refunds in France would likely need to follow a completely different process applicable for companies established outside the EU; this being the Thirteenth VAT Directive (86/560/EEC). Similarly, those reimbursements would be subject to conditions related to the companies and to the transactions carried out. The main characteristic of this process is the obligation for the taxable person to appoint a taxable representative established in France who will be responsible on the company's behalf.
4. I use the British VAT mini-box (MOSS), what should I do after Brexit?
If there is a no-deal exit, the UK would no longer be allowed to connect to EU computer systems. If your company is identified for MOSS in the UK and wants to benefit from this simplification process, you would have to register your company for VAT purposes in any EU member state; France for example.
5. I have a UK company with VAT reporting obligations in France, should I appoint a tax representative?
The French tax administration has confirmed that in the case of no deal, a UK company not established in an EU country wouldn't have to appoint a tax representative.
However, the obligation to appoint a tax representative remains for other taxes such as PAYE (pay-as-you-earn). This representative must be from a company established in France, with a certain 'level of taxpayer honesty' and accredited by the French tax authorities. The tax representative is jointly responsible for all the company's French tax obligations (declaration and payment).
If your company already has a French tax representative, you are free to keep them or designate a new one. However, you may only have one tax representative for all your French tax obligations.
TMF Group can help you with this obligation – learn about our services in France.
6. How do I verify a UK VAT number after Brexit?
Every company liable for VAT in the EU has an individual tax identification number issued by the tax office. This number must be written on invoices, VAT and intrastat declarations submitted by the company.
In order to prevent fraud and scams, companies with commercial relations with European partners (customers or suppliers) must check the validity of their partner's VAT number. For European companies, this verification can be done on the European VAT Information Exchange System (VIES).
After Brexit, it won't be possible to check the validity of a UK VAT number on the VIES website. In order to check a company's UK VAT number, you may ask them for the copy of a recent certificate of taxable status, or any document from the local administration confirming the validity of the VAT number and the company's name and address.
Talk to us
Brexit's impact on VAT rules could be frightening for UK companies doing business in other European countries, as well as for non-UK companies doing business with the UK. TMF Group's tax teams located in the UK, France and throughout the rest of Europe are ready to help you understand what the Brexit consequences are for your business, and guide you through the changes.
Our local offices are authorised to be appointed as your local tax representative for both foreign VAT recovery claims through the 13th Directive process, or local VAT registrations.
Need more information? Contact us today.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
