BREXIT AND ITS IMPACT ON INDIRECT TAXATION

The United Kingdom leaving the European Union opens a period of uncertainty that will have an important effect on companies that carry out business in the UK. The withdrawal will have a huge impact on the VAT treatment applied to the operations carried out with the UK since it will be considered as a third-country, with the tax consequences derived from such treatment. In the absence of a definitive withdrawal agreement, the UK could be treated as a non-EU country as of March 30th, 2019.

In this complex context, last March 1st the Spanish Government has passed the Royal Decree-Law 5/2019 establishing certain contingency measures for the hard-Brexit scenario.

In particular, article 20 refers to customs decisions. UK or Spanish Operators trading goods with the UK may submit their customs requests now, anticipating the consideration of UK as third country. The customs may take effect only as from Brexit.

The first step for all companies that carry out transactions of goods with the UK is to obtain the compulsory EORI number in order to comply with the Customs legislation and declare the import/export. BDO Spain may assist you with the EORI request ensuring that you will be prepared to face the new scenario.

Besides, BDO Spain has developed a Brexit hub offering, among others, the following services in order to minimize Brexit impact in your business:

• VAT assessment. – Our VAT experts will analyse the business models of our clients in order to determine which would be the modifications needed in order to be prepared and have an efficient operative from a VAT perspective in case of hard-Brexit scenario.
• Import VAT.- Include our clients in the deferred import VAT scheme. BDO Spain will assist our clients to accomplish all the tax formalities to be included in this special VAT regime
• Customs analysis. – Redesign the customs strategy of our clients and suggest tax-efficient customs and VAT alternatives in order to avoid additional costs.
• AEO assistance. - BDO Spain will offer assistance, guidance and advice through the procedure of obtaining the AEO status.
• Tax representation. – The UK companies must appoint a Spanish tax representative for VAT purposes. BDO Spain could act as tax representative for VAT purposes.

From BDO Spain we offer our support in this procedure and will be more than happy to hold a meeting with you to inform about the new transitional scenario, explore post-Brexit options, and implement the correct VAT and customs strategies.