The exit of Great Britain and Northern Ireland (UK) from the European Union (EU) will have very significant VAT consequences at the end of the so-called transition period of December 31, 2020.
The United Kingdom has qualified as a third country for Value Added Tax (VAT) purposes since January 1, 2021. This does not apply to Northern Ireland for the supply of goods due to its special status. Numerous EU directives in the field of VAT continue to apply to Northern Ireland. In future, a strict distinction must be made between Great Britain and Northern Ireland in the supply of goods. Northern Ireland is still considered a so-called community area for VAT purposes. However, caution is required when providing services. Northern Ireland is also considered as a third country here.
The treatment of supplies made before January 1, 2021, in which the item supplied has reached the UK or domestic from there after December 31, 2020, is questionable. The treatment of other services (long-term services), the provision of which begins before January 1, 2021 and ends after December 31, 2020, must also be examined. Shortly before the end of the so-called transition period of December 31, 2020, the Federal Ministry of Finance expressed itself for the first time in an administrative instruction.
Changes will also result from January 1, 2021 for the application of the so-called Mini-One-Stop-Shop and for the so-called input VAT refund procedure.
Finally, after December 31, 2020, it will no longer be possible to check VAT identification numbers for companies based in the United Kingdom in the so-called confirmation procedure according to Section 18e of the Value Added Tax Act (UStG).
In the first few weeks of the new year, it turned out to be particularly relevant in practice that companies based in Great Britain need an authorized recipient in Germany in accordance with Section 22f (1) sentence 4 UStG.
How things will actually continue in practice in so-called administrative assistance procedures remains open at the moment, even if the German tax authorities refer to the continued applicability of various European agreements.
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