Brexit VAT notice

In January 2019, the Luxembourg VAT authorities published a preparedness notice on the VAT-related consequences of the United Kingdom (“UK”) withdrawal from the European Union (“EU”) as from 29 March 2019, in case of a “no-deal” Brexit. 

In a nutshell, the notice provides that the UK will be considered by the EU as a third country for the application of the VAT rules on the supply of goods and services. Most specifically:

• with regard to the supply of goods between Luxembourg and the UK, these transactions will be subject to Luxembourg VAT rules on imports and exports. The Luxembourg VAT authorities also raise the temporary but limited risk of double taxation related to ongoing movements and advises taxpayers to move the timing of the transport of goods in order to avoid this issue. 
• with regard to the supply of services between the EU and the UK, the applicable VAT treatment is linked to the place of supply of services which is determined based on various factors. The impact of such rules must be assessed on a case-by-case basis.

Regarding VAT compliance, the reporting requirements related to the intra-EU supply of goods and services and triangular operations still apply to the relations with the UK undertaken between 1 January 2019 and 29 March 2019.

The Luxembourg VAT authorities also recommend anticipating the UK withdrawal, in particular for evidence purposes. It should be noted that as from 29 March 2019, taxpayers will no longer be able to check the VAT identification number of UK customers through the EU VIES (VAT Information Exchange System).

Regarding VAT refunds, requests for VAT paid before December 2018 should be filed as soon as possible before the UK withdrawal. For VAT paid from 1 January 2019 to 29 March 2019 and VAT paid before for which a refund request has not been submitted by 29 March 2019, the request must be made using national procedures.