As of 31 December 2020, the transitional period ended, when European Union law ceased to apply in the United Kingdom (United Kingdom of Great Britain and Northern Ireland), and from the point of view of VAT, the United Kingdom became a third country from 1 January 2021.
For cross-border trade in goods, the goods will be subject to customs supervision and may be liable to customs controls. The entry of goods from the United Kingdom into the EU will be subject to the normal rules for the import of goods. The exit of goods from the EU to the United Kingdom will be the export of goods. It will be necessary to document the decision of the customs office or provide other means of proof to prove the exit of goods from the EU. If the goods were delivered to the United Kingdom or the goods were acquired from the United Kingdom before 1 January 2021 and after that date there is a situation where the tax base has to be corrected, this correction will be made under the original supply regime, i.e. delivery of goods to another EU Member State or acquisition of goods from another EU Member State. Furthermore, it will not be possible to apply specific procedures, rules or special regimes that are valid in the trade in goods only between EU Member States, such as dispatch of goods, simplified procedure for delivery of goods within the EU in the form of triangular trade, etc.
The import and export of goods to and from the EU also involves the obligation to have a European EORI number. An EORI number issued by the United Kingdom will no longer be sufficient. From 1 January 2021, not only will there be changes in the reporting in the VAT return, summary and control reports, it will also not be necessary to show Intrastat reports.
However, these rules on cross-border trade in goods do not apply to Northern Ireland. For cross-border trade in goods related to Northern Ireland, EU VAT legislation will continue to apply for at least four years from 1 January 2021, i.e. the entry of goods from Northern Ireland into the EU will be the acquisition of goods from another EU Member State and the exit of goods from Northern Ireland into the EU will be the delivery of goods to another EU Member State or the dispatch of goods. The specific procedures and special tax regimes applied between EU Member States will be maintained. Northern Ireland will use the new prefix “XI” in the VAT identification number for VAT purposes when trading goods within the EU.
If the goods were delivered to or acquired from the United Kingdom before 1 January 2021 and after that date there is a situation where the tax base has to be corrected, this correction will be made under the original supply regime, i.e. delivery of goods to another EU Member State or acquisition of goods from another EU Member State.
For the purposes of taxing services, the United Kingdom, including Northern Ireland, will be treated as a third country, i.e. in order to determine the tax regime applied to individual performance, it is crucial to determine where the place of performance is. Services provided to the United Kingdom after 31 December 2020 will no longer be subject to the recapitulative statement.
The mini one stop shop (MOSS), under which businesses providing electronic, telecommunications, radio and television broadcasting services to non-taxable persons could register in the United Kingdom until the end of the transitional period, will also be affected. From January 2021, the provision of these services to customers in the United Kingdom will no longer be eligible for this special scheme for the declaration and payment of any VAT due in the United Kingdom.
Refund applications for tax paid by 31 December 2020 must be submitted by 31 March 2021, at the latest. However, this does not apply to the acquisition of goods by a payer in Northern Ireland or the acquisition of goods in the Czech Republic by a taxable person established in Northern Ireland. In this case, it will be possible to submit the application by 30 September 2021.
