The Luxembourg VAT authorities issue a “BREXIT preparedness notice”

• United Kingdom
• Luxembourg

• Brexit
• Financial services and markets regulation
• Tax planning and consultancy

11-02-2019

The Luxembourg Administration de l’Enregistrement, des domaines et de la TVA (the « VAT Authorities ») have released on 28 January 2019 a notice in view of informing the taxpayers on the potential impact of a hard / no deal BREXIT and on the actions to be taken accordingly.

The VAT authorities confirmed that as of 29 March 2019 at 24:00 Brussels time, the UK will be a third country for VAT purposes.

Change of VAT regime applicable to delivery of goods and supply of services

The delivery of goods between EU and the UK will be treated as import / export for VAT purposes.

The supply of services would also be regarded, from Brexit date, as provision of services to a client located outside the EU, and therefore governed by a different VAT regime. This will affect Luxembourg taxable persons acquiring services from the UK as well as EU taxable persons providing services to the UK based clients. Especially, for services rendered during a period overlapping the pre and post Brexit date, a change of regime will apply and shall be considered.

Reporting and control

The transactions carried out prior to Brexit date remain subject to the normal reporting obligations for intra EU transactions. It will be necessary to ensure that all necessary documentation is available before Brexit. Further, as of 29 March 2019, it will no longer be possible to verify the EU VAT numbers based on VIES systems.

VAT Refund procedures

As of Brexit, the only remaining refund procedure for the UK VAT payers wishing to recover Luxembourg input VAT will be based on the 13th Directive, and no longer under the intra EU electronic procedure.

For EU taxable persons wishing to recover the UK VAT, the electronic procedure under EU law will no longer be possible as of Brexit. At this stage, it is uncertain which procedures will be applicable in the UK.

It is therefore advisable that all taxable persons consider as of now how Brexit will affect their own VAT situation.