Goods moving between the UK and EU 27 member states are now liable to import VAT payments following the UK leaving the EU VAT regime as part of Brexit. But, with careful planning EU or UK traders can avoid the cash payments required and keep goods flowing. This can be done through countries’ postponed VAT accounting or deferred VAT regimes. Contact Avalara for country schemes and applications – and you may also need a special fiscal representative for UK businesses with EU VAT registrations.
If suppliers of goods switch to Delivered Duty Paid (DDP) INCOTERMS, they can take care of the customs processes and import VAT, and ensure there is no interruption of goods movements after Brexit, and limit import taxes.
Postponed Accounting – deferring import VAT payments through VAT return
Movement of goods between the UK and EU27 member states are now subject to import VAT in the country where the goods are cleared though customs. UK VAT is currently 20%; the average EU VAT rate is over 21%.
Postponed Accounting, or Deferred VAT, allows any importer with a local VAT registration to defer the import VAT due when they import goods into the UK or EU. The importer simply reports the VAT due and recoverable in their next return, and therefore no cash need be paid.
Which countries provide import Deferred VAT?
Many EU countries now allow Postponed Accounting. The UK Postponed VAT Accounting started 1 January 2021 – and there is no need to apply with HMRC.
