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Post Brexit summary for VAT & Customs procedures

Since January 1st, 2021, transitional period was over, letting EU & UK businesses deal with many administrative procedures in order to be in compliance with the Post Brexit regulations. Eurotax experts provide you with a short summary of some of the customs procedures in the Post Brexit era.

Customs Procedures 

Customs controls and formalities required under UK and EU law, including entry and exit summary declarations, are applying to all goods leaving the customs territory of the UK and entering the EU and all goods leaving that customs territory of the EU entering UK. 

The new customs procedures do not concern trade of goods between the EU and Northern Ireland, where the Protocol on Ireland and Northern Ireland – included in the Withdrawal Agreement – will apply. 

UK and EU have agreed to recognize each other’s ‘Authorized Economic Operators’ (AEO) programs, enabling traders that benefit from this status to enjoy some simplifications and/or facilitations relating to security and safety in their customs operations with the customs authorities of the other Party.

AEO status is likely to become an important solution for post Brexit trade. For your international trade between the UK an the EU we advice you to examine the benefits of this status in our dedicated page so we can help you by setting up all the process required.

Movements of Wine

While the introduction of customs procedures in the UK is being phased in over the first 6 months of 2021, the rules applying to the movement of alcohol will apply almost entirely in full from 1 January. 

However, The Agreement introduces simplified wine import certification for imports of EU wine into the UK and for the export of UK produced wine to the EU. The new simplified certificates do not need to include the results of a costly laboratory analysis and can also be self-certified by producers and exporters. The new certification requirements are more akin to the current requirements for completing an eAD when moving wine within the EU. The text also provides the possibility of the certificates being electronic documents rather than paper based. DEFRA (Department for Environment, Food & Rural Affairs in the UK) has confirmed that the new certification requirements for EU wine imports into the UK will apply from 1 July 2021. Movements of UK produced wine to the EU from 1 January 2021 will however require the new certificates to be completed.

Postponed VAT accounting for UK imports 

Postponed VAT accounting helps to keep on cash flow when importing. (businesses which already import products from outside the EU might see cash flow benefits because it removes the need to account for the import VAT typically due which must currently be paid at the point of importation). 

However, postponed VAT accounting is mandatory if you defer the submission of customs declarations, such as making use of the initial six-month customs deferment period after the end of the transition period. 

Key to managing postponed VAT accounting are the online monthly statements. This new report will show simply the import VAT that has been postponed during the previous month. 

Remember that import VAT should be calculated after duty and other costs. Because of this, it’s unlikely to be acceptable to estimate import VAT based on the supplier invoice alone. 

The postponed accounting report will form a vital part of your VAT accounting records. Businesses will need to download and retain copies for your records in case the information is no longer available online. 

Eurotax will help you with your VAT compliance in the UK, do not hesitate to contact us if you have any question.

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