Brexit effects on UK entities doing business in the EU

One of the areas that will be significantly impacted by Brexit is the settlement of VAT on transactions involving UK entities or comprising the movement of goods from or to the UK.  If an exit “divorce deal” between the UK and the EU is reached, a transition period will apply until the end of 2020 (or even 2022). Businesses will thus have time to adjust to the new rules.

In the event of a no-deal Brexit, in less than a few weeks the rules of taxation applicable to transactions made between entities from the UK and other EU member states will change significantly.

As such, UK businesses registered for VAT in Poland will be obligated to appoint a fiscal representative – a legal entity established in Poland that will be jointly and severally responsible for any VAT liabilities of the foreign entity.

Moreover, UK entities shipping goods to a call off stock in Poland who currently employ a simplified settlement scheme may be required to register for VAT in Poland and account for tax on these transactions.

Amended VAT treatment will also need to be applied to certain transactions performed by UK companies that involve Poland such as e.g. transfers own goods or distance sales.

Companies who currently use the UK Economic Operator Registration and Identification (EORI) number may be required to apply for an additional number in another member state in order to be able to import goods to or export them from the EU.

Brexit will not however only impact the VAT settlements of UK entities.  Companies from other EU countries conducting transactions with contractors from the UK will need to adopt some changes in VAT treatment of certain transactions, such as:

  • supplies of goods to and purchases from the UK which will cease to be seen as intra-EU transactions and will be treated as export or import of goods instead,
  • triangular transactions to which simplified schemes has been applied so far,
  • movements of own goods to and from the UK,
  • distance sales.

Once the UK is no longer treated as an EU member state, selling goods to or purchasing from the UK will require an EORI number.  Hence, businesses who do not currently have the number in place will need to obtain it, as without it they will not be able to continue to import or export goods with the UK after Brexit.

ALTO has seasoned legal, tax and administrative teams to assist you with assessment of the Polish tax implications of your business and structure the new settlements after Brexit.

Please contact for more details.

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