The UK officially left the EU on January 31st, 2020, and after a year that served as a transition period, new rules were implemented as of January 1st, 2021. If your company is located in the EU and operates within the EU, then you need to understand your VAT obligations.

The United Kingdom´s withdrawal from the EU, the Single Market, and the Customs Union brought about unavoidable changes to customs and taxation. If you are a business that imports or exports to or from the EU, or if you sell goods or digital services online to consumers in the EU, you need to be aware of the regulations that apply in each case. Although these regulations might be new for the UK, they were already implemented for all the others countries outside the EU. The UK, however, benefits from the Trade and Cooperation Agreement.

When we talk about EU-based companies, most sales and purchases of goods and services that occur within the EU are charged with VAT. Generally speaking, this tax is due in the country where that good is consumed and charged when service is provided.

In the case of exports of goods to non-EU countries, VAT is charged and due in the country of import. When you export, it is not necessary to declare VAT, but you need to provide documents as proof that the goods left the EU. However, if your company does not belong to the EU but is exporting goods to any of its Member States, then there is an obligation to comply with export declarations and import requirements.

VAT on imports and exports is merely the tip of the iceberg. You will also have to consider other implications such as the need for EORI numbers, changes in VAT reporting obligations and payments, software updates, or even assistance with customs. If your company already operates within the EU or plans to start doing so, you should analyze the new regulations and what implications they might have on your business. Will you be able to handle this extra workload?

At First European, we can help you navigate through this challenging topic. It is essential to understand that VAT regulations are not to be taken lightly, and compliance is crucial to avoid future consequences.

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