Brexit: Changes to VAT treatment of goods imported in the UK from 1 January 2021

The United Kingdom has announced changes in the VAT treatment of goods imported from outside the UK and sold on the territory of this country.  This new set of rules will enter into force on 1 January 2021, at the end of the Brexit transition period.

In a nutshell, the main changes include :

  • For goods sold directly to UK consumers without online marketplace involvement, the obligation for overseas seller to register for UK VAT purpose and account for the VAT to the UK tax authorities;
  • Online marketplaces, where they are involved in facilitating the sale, will be responsible for collecting and accounting for the VAT;
  • New rules also aim B2B sales not exceeding £135 in value. However, the VAT will be accounted for by the business customer on a reverse charge basis when the latter holds a VAT registration number in the UK and provides its VAT number to the supplier;
  • For imports of goods from outside the UK in consignments not exceeding £135 in value, UK VAT will be collected at the point of sale, rather than the from the point of importation.

Negotiations for a comprehensive post-Brexit free trade agreement between the European Union and the UK are expected be finalized in the coming months.