Significant upcoming VAT and excise consequences of Brexit

Great Britain’s exit from the EU is nearly upon us. Polish entrepreneurs should already start implementing tools which will allow them to seamlessly continue trade operations on the British market after January 1st 2021.

All entities which make transactions with Great Britain must take into consideration the fundamental changes which will take place. This will cause some difficulty in preparing tax returns properly. There will be greater documentation requirements, and additional formalities will extend the entire process. Great Britain being part of the EU guaranteed a standardized system with regard to VAT excise law. Now that they are leaving, they will of course be treated as a non-EU country by EU and, of course, Polish regulations. What follows is a change in standards of VAT transactions, as well as additional obligations and challenges:

  • Movement of goods between the UK and UE will now be classified as import and export. This causes additional requirements for using a 0% VAT rate during export, and will require that import VAT be declared in Poland. Not adhering to these regulations will have all the same consequences as for transactions with any other non-EU entity.

  • Some British businesses will be required to register for VAT in Poland, as well as appoint a tax representative to comply with VAT regulations.

  • VAT refunds from EU member states for entities established in Great Britain will, after a transitional period, follow the same rules and regulations as for other non-EU countries

  • Starting January 1st 2021, an optional import procedure will be implemented for distance sales from non-EU countries to end-clients in EU countries for transactions with a total value up to 150 EUR.

  • It will not be possible to apply exemptions for low value (up to 135 GBP) import transactions to Great Britain  

  • It will not be necessary to submit Intrastat or intracommunity transaction summaries

  • The place of supply for certain services to British taxable entities will be different than before. They will be taxable outside of the EU, so EU tax regulations ill not be relevant. Changes will also occur for services provided by British entities.

  • It will no longer be possible to use European regulations for distance sales. Any transactions classified as distance sales of goods from Poland will now be classified as export of goods, while distance sales of goods to Poland will be classified as import of goods.

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