Brexit Guide: What to do as a UK business

Note: It’s your responsibility to consult with local tax authorities or a tax professional to verify your tax liability, the correct tax rates, and to ensure you file and remit your taxes correctly.

As of 1 January 2021, the UK will leave the European Union, and this will affect the EU VAT obligations for your business. Quaderno will help you comply with any changes.

This article covers:

  • Selling digital products to the EU
  • Selling physical products to the EU

Selling digital products to the EU

If you’re selling digital products to the EU and are registered in the VAT MOSS, Quaderno will automatically stop applying VAT on your EU sales after 31 December 2020.

The key issue here is registering for EU VAT as a non-EU business.

Before you re-register for EU VAT, you should know it’s not required across the board. Here’s the breakdown:

  • If you only sell digital products in B2B transactions, then you do not need to register for EU VAT.
  • If you ever sell digital products B2C in Europe, even just once, then you need to register and get your business a VAT number!

So, if you’ve decided you do need to register, follow these steps:

  1. As of 1 January 2021, you should register with a new EU VAT MOSS in the non-union scheme. You’ll receive your new EU VAT number either electronically or by mail. The prefix of the number will be “EU.”
  2. Next you should add the EU member state as a jurisdiction in your Quaderno account. Then Quaderno will cover your sales within the EU VAT MOSS scheme.
  3. Once you’ve received your EU VAT number, please add it to the same jurisdiction data in your Quaderno account.

Selling physical goods to the EU

If you’re a UK business selling physical goods or non-digital services to EU customers, Quaderno will automatically stop applying VAT to your sales in the EU after 31 December 2020.

As of 1 January 2021, your sales to EU customers count as imports. Here are the steps you should take to prepare your business:

1. Apply for an EORI number with HMRC.

Under UK law, you need an EORI number — or an Economic Operators Registration and Identification number — to export products.

If your business doesn’t have one already, then apply for an EORI number right away, and you should receive it in about a week.

If you’re mailing products yourself by post, learn how to properly send exports from the UK.

2. Declare exports to the EU.

From 1 January 2021, you’ll need to make customs declarations when exporting goods to the EU. These rules currently apply to exporting goods to the rest of the world, including Switzerland, Norway, Iceland and Liechtenstein.

The UK government offers resources for how to handle this:

3. Do you store any stock in an EU member state? Then you must register for EU VAT in each country where you have property.* Amazon Fulfillment centers and any other third-party warehouses count.

4. Once registered, you should add the EU member state as a jurisdiction in your Quaderno account.

*If you’ve determined that you do not need to register for EU VAT, then your EU customers are responsible for the following:

  • B2B buyers must prepare the correct import customs declarations.
  • B2C buyers may have to pay Import VAT upon delivery of goods.

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