Brexit: 29 March 2019. When goods are imported from the UK and delivered to the UK, there will be consequences for both entrepreneurs and private individuals as a result of leaving the EU. As a counterpart to our previous article “Brexit and its sales tax consequences for the entrepreneur”, we highlight in the following article the sales tax effects of Brexit on a natural person.

1. Britain becomes a third country

Council Directive 2006/112/EC on the common system of value added tax applies exclusively to EU Member States pursuant to Article 5(1) of the VAT Regulation in conjunction with Article 5(2) of the VAT Regulation. In addition, each State to which the Treaty does not apply is qualified as a third country under Article 5(4) of the VAT Regulation. Regardless of remaining in the EEA, the United Kingdom would inevitably become a third country. A legislative amendment of the VAT SystRL is not expected in principle, since the VAT SystRL accesses EU law. [2] However, the European Union and the UK agreed on a transitional phase until 2020, during which the UK will remain part of the Customs Union.

For private individuals, there will be a change regarding the shipment to a consignee insofar as the UK is no longer a third country of the European Customs Union. It is therefore likely that the German private person must fulfill customs formalities when delivering to the United Kingdom. The extent to which these will extend has not yet been conclusively clarified. As in the case of shipments to other third countries, a customs declaration will most likely be required. In a customs declaration, the consignor shall indicate, inter alia, the value and content of the consignment. [] 4]

2.1 Import VAT and customs duties

When importing goods from Great Britain, the recipient will probably in future be subject to both import sales tax and customs duties, depending on the value of the goods. A distinction shall be made between free and paid shipments. Until now, natural persons can receive gifts from persons resident in the UK without quantities or value limits.

Free of charge means gem. Article 25(2)(c) of the Customs Exemption Regulation, that the consignee receives the consignment without any payment. Payment is also considered to be exchange or other consideration. [] 5]

In the case of paid deliveries to Germany, the recipient will in future have to pay import duties in the form of customs duties and import VAT, depending on the value of the goods. Whether the delivery comes from a company for made purchases or from private individuals is irrelevant, as far as a paid delivery is available. A swap transaction between private individuals would thus also become subject to import duties.

2.2 Tariff exemptions

In accordance with Article 25 of Regulation (EC) No 1186/2009 of the Council of the European Communities of 16. laying down a Community system of relief from import duties on goods received by a natural person established in the country from a person from a third country, up to a value of EUR 45, in so far as these are not based on commercial considerations. Import duties are defined, inter alia, as customs duties in accordance with Article 2(1)(a). In addition, Article 27 also limits the quantity of products, such as cigarettes, alcoholic beverages or perfumes. If the maximum permissible limit for these product groups is exceeded, import duties are therefore due, even without exceeding the value of the goods of 45 euros.

In principle, in addition to the customs duties, the import VAT is also due, here the exemption of the value of the goods of 45 euros applies, since the provisions for customs in Regulation (EC) No 1186/2009 of the Council of the European Communities of 16. November 2009 in accordance with § 21 Abs. 2 VAT Act (UStG) are valid. The amount of the import sales tax is calculated according to the amount of the tax rates according to § 12 UStG. The tax rate is currently 19 percent according to § 12 Abs. 1 UStG and may apply in accordance with § 12 para. 2 UStG for certain product groups reduced to 7 percent. As a basis of assessment, the customs value according to § 11 Abs. 1 UStG.

If the value of goods exceeds 45 euros for free shipments, in addition to the duties laid down in the Union Customs Code, the import turnover tax is also due, § 1 para. 1 S. 3 of the Customs Administration Act. If the value does not exceed 700 euros, flat-rate tax rates of 15 percent or 17.5 percent according to § 29 para. 1 and para 2 no. 6 of the Customs Ordinance. These already include VAT on imports. On request, however, according to § 29 Abs. 3 Customs administration law are exempted from the flat-rate and the collection is carried out according to the customs tariff and tax laws. Only with a value of goods from 700 euros for free consignments, the consignee has to bear the import duties according to the duty rates of the customs tariff.

2.3 Tariff exemption Regulation

For deliveries in return for payment, consignments with a low value according to Article 23 para. 1 Ordinance on relief from import duties pursuant to Article 2(1)(a). The low value is described in Article 23 para. 2 Customs exemption ordinance for each shipment is defined as 150 euros. Except for this, according to FIG. Article 24 of the Tariff-Exemption Regulation, alcoholic beverages, perfumes and toilet water and tobacco and tobacco products.

For paid shipments with a low value, import VAT is still charged. However, for paid shipments with a value of goods of less than 22 euros, no import VAT is levied, only from a value of goods of 22 euros to 150 euros import VAT is to be paid. [] 6]