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Avoid EU & UK import VAT after Brexit; Postponed Accounting

  • Jan 1, 2021 | Richard Asquith

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.

EU member state Deferred VAT scheme
Belgium UK, non-EU and other companies may apply for VAT deferment on importing. 
France Allowed. With some track record of compliance and financially stable. Non-EU businesses must appoint a Fiscal Representative.
Germany

Limited. There is only the possibility to delay import VAT payments via a bank guarantee to the tax authorities.

Ireland Allowed. Introducing an import postponed accounting regime following the announcement of Brexit.
Italy No postponed accounting for Italian import. Businesses must complete a VAT recovery claim – 8th Directive for EU businesses and 13th Directives for non-EU businesses, which includes the UK from 2021.
Luxembourg Postponed accounting on import VAT is permitted through a VAT registration.
Netherlands A special ‘Article 23 License’ is required for import VAT deferment. This will require a bank guarantee with the tax authorities. A non-EU businesses is required to appoint a Fiscal Representative. The Dutch Brexit Fiscal Rep requirements was clarified in September 2020.
Poland Has recently extended its postponed accounting regime for importers.
Spain Limited to large tax payers, taxpayers on refund regime or groups companies.
Sweden Postponed accounting permitted.

Contact Avalara for country schemes and applications.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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