EU – UK Tax & Compliance Bulletin 65

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Brexit: Changes to VAT treatment of Overseas Goods in the UK and Guidance on EU Imports

The Government of the United Kingdom has announced changes in the VAT treatment of goods imported from oversees and sold to UK customers and a new set of rules which will enter into force on 1 January 2021, at the end of the Brexit transition period. The UK Government has also published guidance on actions required by business to continue importing from the EU Member states after 1 January 2021.

The main changes include:

  1. For goods sold directly to UK consumers without online marketplace involvement, the overseas seller will be required to register and account for the VAT to the UK tax authorities, HMRC.
  2. Online marketplaces, where they are involved in facilitating the sale, will be responsible for collecting and accounting for the VAT.
  3. B2B sales not exceeding £135 in value will also be subject to the new rules. However, where the business customer is VAT registered in the UK and provides its valid VAT registration number to the seller, the VAT will be accounted for by the customer by means of a reverse charge.
  4. For imports of goods from outside the UK in consignments not exceeding £135 in value, a UK supply VAT will be due rather than import VAT. As a result, VAT in the UK will be collected at the point of sale, rather than the from the point of importation.

Negotiations for a comprehensive post-Brexit free trade agreement between the European Union and the UK are expected be finalised in the coming months to avoid a ‘cliff-edge’ scenario come the end of the transition period on 1 January 2021, under which the UK and European Union will trade on less than optimal WTO terms. The next round of post-Brexit talks are scheduled for 17 August in Brussels, 7 September in London and 28 September in Brussels.

A joint European Union-UK statement issued confirms that the UK will not entertain an extension of the transition period, and states that significant progress still needs to be made to agree an exit deal. It indicated that negotiations will be intensified in the coming months, though the recent statement of EU negotiator Michel Barnier is less than encouraging as to the likelihood of an agreement being reached. Access to the Single Market remains a key stumbling block in the negotiations.

European Tax Professionals Call for Better Tax Governance: Joint statement of CFE Tax Advisers Europe and Accountancy Europe

Ahead of the European Commission Anti-fraud tax package, Accountancy Europe and CFE Tax Advisers Europe, leading European associations for tax professionals, highlight three areas for policymakers in which the current tax system could be improved whilst longer term reforms are being developed. Policymakers, taxpayers, and tax professionals need to work together to make tax systems more resilient and fit for purpose for the 21st century.

The Joint Statement has set out four key messages to the EU and other relevant stakeholders:

  1. Member States should co-operate with the help of the European Commission to develop effective co-operative compliance programmes suitable for all sizes and types of businesses and that facilitate cross-border trade and reduce the possibilities for double taxation;
  2. Cooperative compliance programmes should be subject to transparency of tax administrations and respect of taxpayers’ rights, as set out in national and international / EU law;
  3. Businesses should consider the advantages that voluntary public tax transparency – as an integral part of their sustainability policies – could bring to their business and its relationship with tax authorities and other stakeholders;
  4. Businesses and tax authorities should invest in the latest IT solutions to improve the quality of data, communication, and remote access to services.

Full details concerning the joint statement can be found here.

Platform for Collaboration on Tax Published Progress Report 2020

The Platform for Collaboration on Tax, a joint initiative of the IMF, OECD, UN and World Bank Group, has published its 2020 Progress Report, highlighting activities that the Platform has carried out since June 2019 under three work streams: cooperation and exchange of information in domestic revenue mobilisation capacity development activities, analytical activities, and outreach activities. Despite the challenges posed by COVID-19, the Platform quickly adapted to a virtual delivery environment to support developing countries in building capacity to mobilise tax revenues, the OECD has stated.

Publication of OECD’s Development & Tax Cooperation Report

The OECD has published its Tax Cooperation for Development Report, highlighting the OECD’s work with developing countries since the 1990’s. Commenting, the Director of the OECD Tax Administration and Policy Centre, Pascal Saint-Amans wrote:

International support for capacity building in all areas of tax administration and tax policy therefore remains essential and must be stepped up. The current crisis also provides the opportunity for a deeper reflection on the current state of play. Crucially, it appears that many low-income and low-capacity countries are uncertain about the extent to which the direct benefits of the reforms in the international tax standards, particularly regarding the taxation of multinational enterprises, flow to them. Five years after the BEPS Project, and ten years after the establishment of the Global Forum, the time is right to assess the benefits for the developing world.”

OECD Publishes Annual Corporate Tax Statistics

The OECD’s annual Corporate Tax Statistics, based on the Country-by-Country Reporting requirements for MNEs under the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project, indicate that corporate income tax remains a significant source of tax revenues for governments across the globe, accounting for 14.6% of total tax revenues on average across the 93 jurisdictions in 2017, compared to 12.1% in 2000. Corporate taxation is even more important in developing countries, comprising on average 18.6% of all tax revenues in Africa and 15.5% in Latin America and the Caribbean, compared to 9.3% in the OECD countries.


Source: Malta Institute of Taxation Click here and CFE Tax Advisors Europe Click Here

Please contact David Marinelli should you wish to discuss any matter relating to your Malta registered company