What might be the value added tax (VAT) treatment of consultancy services provided by Belgian companies to non-taxable clients established in the United Kingdom in light of Brexit?
The EU and UK have negotiated a transitional period that suspends the legal effects of Brexit until 31 December 2020. This transition period is intended to allow companies to anticipate implications of Brexit on their activities—including in terms of VAT.
Current location rules - services provided to non-taxable customers outside the EU
As a general rule, a service provided to a non-taxable person (individuals, public bodies, passive holding companies, etc.) is located, from a VAT point of view, in the country where the service provider is established.
However, there are exceptions to this rule—such as when certain "intellectual or intangible" services (listed exhaustively) provided to a non-taxable person that is established outside the EU. The service is then located in the country where the customer is established. This can apply to advertising services and also to services provided by advisers, engineers, consulting firms, lawyers, accountants, and others providing similar services, as well as data processing and the provision of information.
Therefore, consider consulting services provided by a Belgian professional to an individual residing in London. From a VAT point of view:
This example illustrates what would be the Belgian VAT treatment only. For the services to be subject to VAT in the UK, the law in the UK must provide for this treatment.
Read an August 2020 report (French) prepared by the KPMG member firm in Belgium
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.