Brexit: the new tax obligations
Exporting to the UK and the new tax obligations
On January 1, 2021, the agreement between the EU and Brexit came into force.
It is a wide-ranging agreement, touching many points, first of all the commercial one. The new rules, which came into force on January 1, 2021, include new customs formalities, both for an Italian company exporting to the UK and for a British company exporting to the EU.
Two crucial points that change are the VAT regime applicable to transactions between the EU and the UK and the customs regime.
Today we delve into the UK tax obligations of an Italian company that wants to export to the UK.
UK tax obligations
The export to the United Kingdom foresees two possibilities for an Italian company:
- the appointment of a fiscal representative in the UK
- a direct import by the Italian company
The appointment of a fiscal representative in the UK
If the Italian company opts to have a fiscal representative in the UK, it will leave the formalities for importing into the UK to the legal representative.
The Italian company will only take care of getting the goods to UK customs. The fiscal representative in the UK will take care of the customs clearance and delivery to the local warehouse.
Direct Import and UK VAT Code
If, on the other hand, the Italian company imports directly into the UK, it shall create an EORI GB code by simply following the procedure on the UK government’s dedicated website https://www.gov.uk/eori.
This will generate an English VAT number, which will allow you to invoice your end customers locally. It will be necessary to pay attention to the different UK VAT rates applicable, which differ from those of the EU and may change in the future due to the new British autonomy.
Finally, the Italian importing company will have to set up a proper accounting system and submit periodic quarterly declarations for the settlement and payment of local VAT.
Do you need more information on how to make business in Italy or on the Italian tax system? Contact our Milan S&T Accountant Office at +39 0236525293 or write an email to a email@example.com.