Brexit new trade agreement: What’s the deal for VAT?

New Trade Agreement reached between the EU and UK!


On 1 January 2021, the United Kingdom will leave the EU Single Market and Customs Union, and all EU policies. As a result, it will lose all the rights and benefits it had as an EU Member State, and will no longer be covered by the EU’s international agreements.


On 24 December 2020, a new “Trade and Cooperation Agreement”  in principle was reached. Both parties will now advance with the signature and ratification of the Agreement, in line with their respective rules and procedures, with a view to its provisional application from 1 January 2021.


Does this change anything to the changes foreseen previously from a VAT perspective? The answer is no.  On 1 January 2021, the UK will still leave the EU Single Market and Customs Union, as well as all EU policies and international agreements. It will put an end to the free movement of persons, goods, services and capital with the EU.  For VAT is means that the intracommunity rules for supplies of goods and services doe no longer apply. Also, B2C sales will no longer be part of the EU rules for distance sales.


For goods traders, the free movement of goods will end.  This means that customs checks and controls will apply to all UK exports entering the EU and vice versa. In the media it is mentioned that the EU-UK Agreement offers zero tariffs and zero quotas on all goods. But it is important to keep in mind that in order to benefit from these exceptional trade preferences, businesses must prove that their products fulfill all necessary ‘rules of origin’ requirements.


In practice, that means that goods must not only be produced in the EU in order to be imported in the UK with import duties but also consist in majority of raw materials that originate in the EU or the UK.  For agricultural products, this is obviously easily fulfilled.  For goods imported in the EU and where duties have been paid, the onward sale to the UK may trigger taxation with customs duties again, as these imported goods do not meet the rules of origin.


Fiscal representation for UK based businesses

Even though the transition period for BREXIT has passed all EU countries still need to adjust to the new rules in relation to VAT and fiscal representation for UK businesses.  This is an ongoing process for many territories. GVC will keep you updated regarding the countries in which a fiscal representative is needed.


At the moment UK Businesses will require a fiscal representative in the following countries:



This information is liable to change very soon, please contact us in order to help you with your fiscal representation.


In the below-listed countries fiscal representation is NOT a requirement for UK-based clients, although there might be other limitations, please check-in comment.  


EU countryComments
FinlandNot needed due to the EU-UK Mutual Assistance Protocol  
FranceNot needed due to the EU-UK Mutual Assistance Protocol 
ItalyNot needed due to the EU-UK Mutual Assistance Protocol 
LithuaniaNot needed due to the EU-UK Mutual Assistance Protocol 
SwedenNot needed due to the EU-UK Mutual Assistance Protocol 
LuxembourgTax office cash deposit may be required 
NetherlandsExcept for import VAT licenses 
MaltaSome exceptions are in place
GermanyVAT agent required 
Czech Republic


Even though the deal means there is no hard Brexit, from a VAT perspective the Brexit could not be any harder.  It is important to be aware of the new rules that will apply. Also, it is important to note that the EU rules for online B2C trade will change significantly mid-2021.



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