Unit 9A, 80 High Street,
Egham, Surrey, TW209HE, UK
Following the UK’s decision to leave the EU, there was confusion with EU member states on the VAT reporting rules purchasing goods from the UK.
As of 31 January 2021, the United Kingdom became a third country for VAT purposes, and the EU reverse charge rules for the supply of goods sent to/from the UK no longer applies.
EU reverse charge after Brexit
This simplified the VAT process for cross border sales and cancelled out the VAT due on the buyer's accounts. After Brexit, businesses based in Great Britain (England, Scotland, and Wales) can no longer apply the reverse charge to EU sales.
Sales to EU business customers (previously known as dispatches) will become exports. For VAT purposes, the supply will continue to be zero-rated and evidence of the movement must be kept by the seller. There will be changes to the reporting requirements for these supplies.
Sales to EU consumers will also become exports, following the same general rules as for business customers.
In short, after Brexit, businesses based in Great Britain (England, Scotland, and Wales) can no longer apply the reverse charge to EU sales. However, businesses based in Northern Ireland can still apply the reverse charge as normal because they are still within the EU VAT area.
EU countries often have very low or no registration limit for non-EU businesses, so the import and onward sale of goods either in the UK or any EU member state is likely to give rise to a requirement to register for VAT.
This requirement is driven by who 'imports' the goods - the contract or Inco-terms will help define that. So in the case of Delivery Duty Paid (DDP) the supplier is the importer, and that in the case of Delivered At Place (DAP), the customer is the importer.
When shipped via DAP, the business customer in the relevant EU member state self-accounts for VAT under the 'reverse charge' mechanism via their VAT return in as much the same way as if they were importing goods from China or the US.