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Brexit impact from a Luxembourg Value-Added Tax (VAT) perspective

Tax impacts of Brexit - VAT

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Goods

  • EU-to-UK sale of goods should be considered as exports whereas UK-to-EU sale of goods should be considered as imports.
  • The main Brexit VAT consequences for goods should be (i) no intra-Community acquisitions of goods and (ii) no distance sales regime.


Services

  • Rules for cross-border supplies to or from third countries should apply to taxable persons established in the UK/EU and supplying services to EU/UK.
  • Regarding Mini One Stop Shop (MOSS), UK rules will need to be verified to determine what is required (EU VAT MOSS not applicable):
    • Luxembourg businesses will be unable to declare their sales in the UK through MOSS.
    • UK businesses selling in Luxembourg will have to apply the non-EU scheme. 


Simplification measures and procedures

  • It is expected that simplification rules for triangular transactions requiring local VAT registrations will no longer apply.
  • Compared to intra-Community goods deliveries, more export documentation will be required and the UK will fall out of the scope of the EU quick fixes.
  • The UK will be disconnected from the EU IT system Vies, which allows identification of taxable persons supplying intra-EU services.
  • Authorities may require a letter of guarantee from an authorized bank regarding the payment of tax and fines for persons established outside the EU and eligible for Luxembourg VAT.


Input VAT deduction right

  • Input VAT deduction right on provision of financial/insurance services to the UK.
  • Input VAT deduction right on the management of investment funds (except Alternative Investment Funds (AIFs)) located in the UK


VAT refund

The eighth Directive’s electronic scheme should not apply to UK businesses incurring VAT in the EU and Luxembourg businesses incurring VAT in the UK, and vice-versa.

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