If you trade with the United Kingdom, be aware of the consequences of leaving the European Union.
As is public knowledge, the United Kingdom's withdrawal from the European Union should take effect on March 29, 2019.
Its “disorderly” exit could turn that state into a “third country”, without a transition period and without any specific preference regarding the treatment of its flows of goods and services, beyond certain contingency rules to minimize the effects, such as those included in Royal Decree 5/2019, approved on March 1 by the Council of Ministers, which requires the United Kingdom to adopt reciprocal measures.
In the event that your company:
- Buy or sell goods to the United Kingdom,
- Provide or receive services from the United Kingdom or
- transport of goods through said territory,
He is therefore interested in knowing what changes in VAT matters this fact may entail.
Below, we explain what the situation would be for these transactions if no specific agreement were reached.
We must distinguish:
a) Deliveries of goods: Deliveries of goods between Spanish territory and the United Kingdom will no longer be considered "intra-community operations" and will therefore no longer be declared on form 349. On the contrary, from the date mentioned, these flows of goods will be subject to customs formalities and an EORI code must be obtained.
Therefore, for goods received from the United Kingdom, VAT would be settled at the time of importation at customs (except for deferred VAT payments). As for goods transported from Spain to the UK, these transactions would be considered exports and would be exempt from VAT.
Furthermore, with regard to deliveries of goods to private individuals in England, it will no longer apply under the distance selling regime.
b) Provision of services: Similarly, these operations cease to be intra-community and are no longer declared in form 349.
The application of the VAT place of supply rules in Articles 69 and 70 of the Law must take this circumstance into account. Thus, for example, the effective use rule set out in Article 70.2 of the Spanish VAT Law applies to the services listed in that article. Furthermore, if a British business not established in Spain carries out transactions subject to Spanish VAT, it must appoint a tax representative resident in Spain.
c) Refund of Spanish VAT paid by non-established British businesses: this process becomes more complex (it cannot be requested directly electronically but must be done through a representative resident in Spain). Furthermore, depending on any reciprocal treatment that may be established between the two territories, VAT refund requests will be restricted to very specific cases (Article 119 bis 3 of the Spanish VAT Law).
If you require our assistance to obtain further information or have any questions, please contact us via our legal email address, ambit@ambitassessor.com, or at our offices.
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A graduate in Law and with a Master's degree in Tax and Financial Management from the University of Barcelona, he also holds a Postgraduate Diploma in New Technologies Law from ESADE. He specializes in tax and corporate law.
Before joining Àmbit Assessor as manager in 1999, he worked as head of the Tax and Accounting department at the Busquets Terradellas law firm.
For years, he combined his work with teaching, serving as a professor of Public Finance and Tax Law at the Open University of Catalonia.
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