This article explains how VAT is applied to orders after Brexit. It covers various scenarios, including UK companies selling to the EU, EU companies selling to the UK, and UK companies selling within the UK.
Selling to and from the UK and EU
As of January 1, 2021, the UK is no longer part of the EU VAT regime, Customs Union, or Single Market. This means all movements of goods between the UK and EU are considered imports or exports.
UK Companies Selling to the EU
If your company is based in the UK and you sell goods to customers in the EU, you are exempt from UK VAT. However, orders produced locally in the EU are treated as domestic sales and are subject to local VAT.
In some EU countries, extended reverse charge regulations may apply, which could result in a 0% VAT rate if you have a valid EU VAT ID in that country.
EU Companies Selling to the UK
Orders shipped from an EU country to the UK are treated as exports. A reverse charge procedure will reduce the VAT charge to 0% on your invoice. Customers must provide a valid VAT ID for the reverse charge procedure to apply.
For purchases over £135 without a valid VAT ID, import VAT will be paid through customs on behalf of the customer.
For purchases below £135, UK supply VAT will be collected and reported on behalf of the customer.
UK Companies Selling to the UK
Brexit doesn't affect companies based in the UK selling to UK customers. All purchases will be treated as domestic sales with a 20% VAT collection.
Additional Information
For further information, refer to the resources below or consult with a tax professional.
Changes to the VAT treatment of overseas goods sold to customers from 1 January 2021 - GOV.UK (www.gov.uk)
Relations with the United Kingdom | European Commission (europa.eu)