CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Davis Resigns UK To Shorter Brexit Transition Period

Davis Resigns UK To Shorter Brexit Transition Period

by Jason Gorringe, Tax-News.com, London

16 March 2018


In an interview with UK state news agency BBC's Newsnight, David Davis, the UK's Brexit negotiator, said the UK would "live with" the December 2020 transition deal being offered by the European Union as part of Brexit, even though the UK had sought the later date of March 2021.

He was discussing new draft Brexit negotiating guidelines published by the EU on March 7, which firmed up some areas surrounding the EU perspective on what the business and tax environment between the bloc and the UK should look like after the UK leaves the European Union.

Davis said it was more important to secure a transition deal than to argue over the length of that period, stating: "That is more important to me than a few months either way. So, I'm not bothered too much about the question of whether it is Christmas 2020 or Easter 2021."

Among other things, the EU decided in earlier guidelines released in February 2018 that the jurisprudence of the EU Court of Justice should continue to apply to the UK until the end of a Brexit transition period, during which EU acquis will continue to apply to the UK as though it were a member state.

In respect of free trade deals and trade policy, the UK will remain bound by the obligations stemming from the agreements concluded by the EU, while it will no longer participate in any bodies set up by those agreements. The EU noted in February 2018 that as the UK will continue to participate in the customs union and the single market (with all four "freedoms") during the transition, it will have to continue to comply with EU trade policy, to apply EU customs tariffs and collect EU customs duties, and ensure all EU checks are being performed on the border.

In addition, the UK will no longer attend meetings of Commission experts groups, committees, or other similar entities where member states are represented, such as for instance in tax matters. Exceptionally on a case-by-case basis, the UK could however be invited to attend one of these meetings without voting rights, the General Affairs Council (Art.50) has said.

Significantly, there will be major ramifications for businesses doing business with and from the UK in terms of indirect tax. In February, the EU explained Brexit will have the following impact on businesses, from December 31, 2020:

For indirect taxes (value-added tax and excise duties):

  • Goods entering the VAT territory of the EU from the UK or are dispatched or transported from the VAT territory of the EU to the UK will respectively be treated as importation or exportation of goods in accordance with the EU VAT Directive. The means VAT must be charged at importation and exports will not be subject to VAT.
  • Taxable persons wishing to use one of the special schemes of Chapter 6 of Title XII of the VAT Directive (the so-called Mini One-Stop Shop or MOSS), who supply telecommunications services, broadcasting services, or electronic services to non-taxable persons in the EU, will have to be registered for the MOSS in a member state of the EU.
  • Taxable persons established in the UK that purchase goods and services or import goods subject to VAT in an EU member state who wish to claim a refund of that VAT may no longer file electronically in accordance with Council Directive 2008/9/EC but have to claim in accordance with Council Directive 86/560/EEC. Member states may make refunds under the latter Directive subject to reciprocity.
  • A company established in the UK carrying out taxable transactions in an EU member state may be required by that member state to designate a tax representative as the person liable for payment of the VAT in accordance with the VAT Directive.
  • The movement of goods which enter the excise territory of the EU from the UK or are dispatched or transported from the excise territory of the EU to the UK will respectively be treated as importation or exportation of excise goods in accordance with Council Directive 2008/118/EC of December 16, 2008, concerning the general arrangements for excise duty. This means, among other things, that the Excise Movement and Control System (EMCS) on its own will no longer be applicable to excise duty suspended movements of excise goods from the EU into the UK, but those movements will be treated as exports, where excise supervision ends at the place of exit from the EU. Movements of excise goods to the UK will therefore require an export declaration as well as an electronic administrative document (e-AD). Movements of excise goods from the UK to the EU will have to be released from customs formalities before a movement under EMCS can begin.

For Customs:

  • Goods brought into the customs territory of the EU from the UK or to be taken out of that territory for transport to the UK, will be subject to customs supervision and may be subject to customs controls in accordance with Regulation (EU) No 952/2013 of October 9, 2013, laying down the Union Customs Code. This means, among other things, that customs formalities may apply, declarations will have to be lodged, and customs authorities may require guarantees for potential or existing customs debts.
  • Goods brought into the customs territory of the EU from the UK will be subject to Council Regulation (EEC) No. 2658/87 of July 23, 1987, on the tariff and statistical nomenclature and on the Common Customs Tariff. This will result in the application of the relevant customs duties.
  • Certain goods which enter the EU from the UK or are leaving the EU to the UK will be subject to prohibitions or restrictions on grounds of public policy or public security, the protection of health and life of humans, animals or plants, or the protection of national treasures.
  • Authorizations granting the status of Authorised Economic Operator (AEO) and other authorizations for customs simplifications issued by the customs authorities of the UK will no longer be valid in the customs territory of the Union.
  • Goods originating in the UK that are incorporated in goods exported from the EU to third countries will no longer qualify as "EU content" for the purpose of the EU's Common Commercial Policy. This will affect the ability of EU exporters to cumulate with goods originating in the UK and may affect the applicability of preferential tariffs agreed by the Union with third countries.

TAGS: environment | compliance | VAT tax authority guidance | tax | business | value added tax (VAT) | VAT legislation | VAT cross-border transactions | law | tariffs | United Kingdom | excise duty | tax authority | agreements | legislation | trade | European Union (EU) | services | VAT case law | VAT compliance matters | Europe | Tax

To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »