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Articles:

Update NO-DEAL-BREXIT & VAT: BMF letter published

14 December 2020

Annette Pogodda-Grünwald , Partner
Head of VAT, Head of Industry Sector Group Real Estate
|
Petra Pinkepank , Senior-Manager Value Addes Tax |

I. BMF COMMENTS ON BREXIT

In a letter dated 10 December 2020, the German tax authorities issued a statement on the VAT status of the UK after Brexit. The BMF letter has clarified that the VAT status of the United Kingdom will be that of a third country from 1 January 2021.

II. SPECIAL REGULATIONS FOR NORTHERN IRELAND

Special rules apply to Northern Ireland: Northern Ireland will be treated as a third country for the provision of services but continue to be treated as part of the Community territory for trade in goods.

III. ADDITIONAL RELEVANT POINTS COVERED IN THE BMF LETTER

The BMF letter also comments on the following points:

  • Treatment of supplies prior to 1 January 2021 where the goods supplied enter or leave the UK after 31 December 2020
  • Treatment of other supplies (continuous supplies) where the supply begins before 1 January 2021 and ends after 31 December 2020
  • Termination of the MOSS procedure for certain services with a last opportunity to report by 20 January 2021 
  • Applications made via the input tax refund procedure for input tax amounts arising before
  • 1 January 2021 can only be submitted until 31 March 2021
  • Refunds of input tax arising after 31 December 2020 must be claimed from the UK authorities
  •  When making input tax refunds, the special provisions for Northern Ireland must be taken into account
  • Liability for VAT when trading goods on the internet marketplace (§§ 22f, 25e and 27 paragraph 25 UStG)
  • Processing of requests for administrative assistance

IV. ACTION

In addition, there will be a change in the procedure for confirmation of VAT identification numbers (confirmation procedure according to § 18e UStG) as of 1 January 2021. Confirmation requests for UK businesses are not possible anymore. For businesses operating out of Northern Ireland, "XI" rather than "GB" must be entered as a prefix. Note, the master data in your ERP system may need to be adjusted.