BREXIT : TVA & Douanes, les impacts sur les entreprises – 19 septembre 2017

Justin Miller, Director at VAT Systems, presented at the Chamber an insightful presentation on the potential Customs and VAT consequences of Brexit.

Justin stated that the Customs and VAT treatment of operations between the EU and a UK no longer within the EU will in all certainty change.

Also, his presentation relied on non-member states’ experience which currently have strong trade ties or agreements with the EU such as Switzerland and Norway which help determine the possible outcomes and the indirect customs and tax implications.

Justin then presented the different strategies a company may wish to take in order to prepare itself for likely changes and to mitigate the risks and effects of such when considering that these eventual changes not having being

  1. Customs consequences

Further, Justin evoked the most obvious aspect that will be impacted by the Brexit : Customs .

Indeed, whereas as goods move between EU member states without frontier and Customs formalities, post Brexit the situation will be different for the future movements between the UK and the EU.

Therefore, Customs formalities will arise and necessitate the requirement to account for import VAT for movements of goods between the EU and the UK, unless specific arrangements are agreed and established.

Justin highlighted that such new Customs formalities are likely to have the effect of having:
–  A negative impact on cash flow in respect of the payment of import VAT
–   Direct costs on import duties where applicable,
– Additional Customs procedures,
– Creating delays to the supply chain;

In addition, Justin explained the likely VAT changes that the entities having commercial relations involving the UK and the EU will have to face.

  1. VAT consequences

Notably, Brexit could affect VAT in the following ways:
-Changes in the VAT treatment of importations, exportations, supplies of goods and services between the EU and a UK post Brexit.
-Greater numbers of incidences where UK companies will be required to VAT register in EU countries and vice versa where EU companies will be required to register for UK VAT with the consequential compliance obligations.
-UK companies will be unlikely to be able to continue to use EU VAT simplification measures in EU member countries and vice versa.
-Compliance and invoicing formalities may well change for supplies between the EU and a UK post Brexit.
-Consequences for the recovery of input VAT incurred by UK companies in the EU and vice versa, the 8th Directive reclaim procedure unlikely to be applicable in such circumstances.

Justin ultimately concluded that despite the uncertainties surrounding Brexit, businesses should have a contingency plan ready.

This plan should consider, among other aspects: cash flow; VAT registrations, restructurings, the impact of EU VAT and Customs regimes currently in place no longer applying, contractual consequences as well as IT aspects.

Justin’s presentation was followed by an interactive question and answer session in which many members participated.

The presentation and discussions were in French.