Brexit and VAT – Changes to which businesses will now urgently have to adapt
VAT law in the EU is considered to have been extensively harmonised through the EU Directive on the VAT system. Once Brexit has been accomplished, this harmonisation in relation to the United Kingdom of Great Britain and Northern Ireland (GB) will automatically cease. This will result in far-reaching changes in the way VAT is charged on business transactions between GB and Germany. To-date, the German legislator, in its draft of the Brexit Accompanying Tax Act (Lower house of German parliament (Bundestag, BT) printed matter: 19/7377) has not provided for any transitional rules to mitigate the impact of this and, moreover, the future arrangements under British tax law are not yet known. Businesses would therefore be well advised to ascertain what action is required with respect to VAT and to prepare the necessary organisational and contractual adjustments. In the course of this, the following 14 major changes, in particular, should be taken into consideration.