Brexit: Britain wants out of the EU. Hardly anyone expected this – especially not in Germany. The speculation about the course of Brexit and the subsequent period following the withdrawal of the United Kingdom from the European Union is great. Especially for international companies in the field of goods or services exchange, a phase of uncertainty begins. Don’t wait any longer and deal with future changes now.

1. Intra-Community supply shall be deemed to be export supply:

Due to the withdrawal from the European Union, no intra-Community delivery to Great Britain can be available for a domestic entrepreneur in the future, which is tax-free according to § 4 no. 1 b) UStG in conjunction with § 6a UStG. [1] However, the under § 12 Abs. 1 No. 1 as an export supply exempted. This is regulated in §§ 4 no. 1 lit. a UStG i. V. m. § 6 UStG. The summary notification which an entrepreneur has to submit within the meaning of § 2 UStG according to § 18a UStG for intra-Community deliveries is consequently omitted.

Both in the case of export delivery and in the case of intra-Community delivery, the entrepreneur has proof of the requirements according to § 6 para. 1, para 3 and para 3a UStG for export delivery or § 6a para. 1 and para. 2 UStG for intra-Community delivery. The obligation to prove the export delivery is provided in § 6 para. 4 UStG and for intra-Community acquisition in § 6a para. 3 UStG.

Until now, the entrepreneur had to provide proof for an intra-Community delivery in transport or dispatch cases acc. § 17a of the VAT Implementing Ordinance (UStDV). This exists according to § 17a Abs. 2 No. 1 UStDV from a double of the invoice and a confirmation of receipt, which contains the information referred to in § 17a para. 2 No. 2 UStDV must contain the information mentioned.

Alternatively, instead of the receipt confirmation according to § 17a para 3a) UStDV, the entrepreneur can use a shipping document, which is also considered as proof. Furthermore, the accounting proof according to § 17c UStDV must be provided, whereby the proof of the VAT identification number is possible via the confirmation portal of the Federal Central Office for Taxes. It is recommended to attach a qualified confirmation as proof to the documents here.

For the export delivery, the entrepreneur has to provide, depending on the case of the export delivery, other export proofs, which result according to the provisions of §§ 9 to 12 VAT, and additionally the accounting proof for export deliveries according to § 13 VAT.

2.2 future proof obligations by Brexit

In the future, the trader must make the following differentiation for the export proofs: transport cases according to § 9 UStDV, shipment cases according to § 10 UStDV, processing and processing cases within the meaning of § 11 UStDV and processing of goods according to § 12 UStDV.

The entrepreneur must provide both proofs in order to obtain the tax exemption. [2] In the absence of evidence, it cannot be established whether the conditions for exemption exist. [3] The Bundesfinanzhof and the European Court of Justice also reaffirmed that the entrepreneur has the task of recording corresponding proof and that the administration does not have to provide the proof. [4] If the trader fails to provide the proof, the principle that the conditions of the export supply are not met shall apply and an exemption from VAT shall be refused. [5] Only if the tax authority is aware by another body that the object was actually carried out, this is to be used for the benefit of the entrepreneur. [] 6]

In addition, the entrepreneur must note that the proofs are available when the tax exemption is assessed. [7] If a tax exemption is claimed without the complete documents, there is a reckless tax reduction according to § 378 Abs. 1 AO or tax evasion within the meaning of § 370 Abs. 1 AO before.[8]

3rd reverse charge procedure

In the case of other services provided by an entrepreneur to an entrepreneur in the United Kingdom, the principle of place of performance according to § 3a para. 2 UStG. The extent to which there is a change in taxation in the current reverse charge procedure is not yet certain and depends on the recasting of the UK rules. [9]

4. Summary declaration

The submission of the summary declaration according to § 18a UStG will in future be dispensed with for the entrepreneur, since this must be submitted only for intra-Community deliveries or other services in the rest of the Community territory.

5th MOSS procedure

Fundamentally, an entrepreneur has provided another service to a private person who is subject to the regulation of § 3a para. 5 UStG falls to register in the country of the recipient and to pay the tax there. Registration can be omitted in accordance with § 18h UStG and the entrepreneur transmits his transactions, which are listed in § 3a para. 5 UStG, in the so-called mini-one-stop-shop (MOSS) procedure. [] 10]

For the application of the MOSS procedure, it must be in accordance with § 18h Abs. 1st sentence 1 Half-rate UStG mandatory for a taxable service in one of the other Member States according to § 3a para. 5 UStG,[11] so that the application of the MOSS procedure will no longer be possible after the withdrawal of the UK from the European Union. The entrepreneur must therefore apply for other services within the meaning of § 3a Abs. 5 In the future, register UStG in the UK for tax purposes. [] 12]

Taxation of future trade in goods

For the import of goods, there is no longer any intra-Community acquisition within the meaning of § 1a UStG after the completion of the withdrawal of Great Britain. Instead, VAT on imports will have to be paid and corresponding customs conditions will have to be met [13] such as customs declarations of importation and payment of customs duties. However, the import VAT does not lead to any additional burden for the trader entitled to the VAT deduction, since he has paid the import VAT as input tax acc. § 15 Abs. 1 no. 2 can deduct UStG.

6.1 No exemptions

Free limits for imports as for private individuals will not exist due to the current contract negotiations. Should Great Britain join the EEA or there be a new customs union still to be negotiated, the importation of goods may be exempt from customs duties.

6.2 Creation of customs documents

However, customs documents must be created. The customs declaration for the import of goods shall, in accordance with Article 5(12) of the Union Customs Code in conjunction with Article 6(3) of the Code, be: 1 Union Customs Code in principle to be carried out electronically. Importation becomes much more bureaucratic for entrepreneurs, regardless of any customs costs, and requires more effort than the previous intra-Community acquisition according to § 1a UStG.