VATLive > Blog > United Kingdom > Extra Brexit VAT registrations to avoid fines

Extra Brexit VAT registrations to avoid fines and keep trading?

  • Jan 1, 2021 | Richard Asquith

To avoid major tax fines, most UK and EU sellers will have to apply for additional VAT numbers to continue selling after 31 December 2020 – the end of the Brexit transition period. They will lose one of their most important VAT simplifications for cross-border selling – distance selling thresholds.

What are the distance selling thresholds?

Sellers with customers around the EU should charge the VAT of their customers’ country. However, to help smaller e-sellers, the EU operates a distance selling threshold simplification. Sellers only have to VAT register in another EU state when the exceed the annual distance selling threshold. Until they reach this sales threshold, they can sell to each EU state charging and reporting the VAT via their home-country VAT registration.

Today, these are:

Country Distances selling annual threshold
Germany, the Netherlands, Luxembourg €100,000
All other EU states €35,000 or local currency equivalent

Why do UK or EU sellers need extra Brexit VAT registrations

UK Sellers: UK sellers can no longer take advantage of these thresholds following Brexit. Instead, if they want to keep selling to customers in any EU state from stocks in the UK, they must VAT register in each target country immediately or consider other incoterm offerings. Failure to do so will trigger immediate liabilities to fines or more probably your goods being stopped. The EU customs authorities will also challenge you early on in 2021 as to why you are not supplying them with an EU VAT number when you are importing goods. One alternative is to move a proportion of UK-held stocks to somewhere in the EU and sell on a distance selling-basis from there.

EU sellers: using their local VAT numbers to sell to UK customers, they will have to apply for a UK VAT registration number immediately if selling goods consignments below £135 or risk incurring UK fines and penalties.

Explore more content like this in our Brexit hub

Need help with your UK VAT compliance?

Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

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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