The seller’s guide to Amazon tax issues: BREXIT and what it means for EU tax

Guest post from Avalara | A three-part series on tax issues and compliance  | Part Two

A no-deal Brexit will mean a monumental rupture with the current EU trading arrangements UK businesses currently trade under.  The UK’s terms of trade with the rest of the world will also undergo a major change as the UK will no longer benefit from preferential tariffs negotiated by the EU on its behalf.  The major trading changes for goods moving across the UK and EU27 borders, and their impact on UK businesses, include:

Tariffs  

  • Exporters to the EU27 become liable to World Trade Organization (WTO) ‘Most Favoured Nation’ standard rates as opposed to current nil EU duties 
  • Importers from the EU27 will have to pay WTO rates unless the UK opts to drop tariffs on all EU and non-EU imports uniformly

Customs clearance 

  • Exporters and importers will be obliged to complete customs declarations for the first time
  • EU imports will face inspections for customs, VAT and regulatory compliance for the first time

VAT 

  • Sellers of low sales volumes of B2C goods to EU27 consumers will have to VAT register in more countries or cease selling in those territories 
  • Sellers of goods to EU27 consumers and businesses will have to appoint fiscal representatives in most EU states 
  • UK companies without EU registrations will lose access to the online EU VAT recovery facility

HMRC has therefore recommended the following three actions to help mitigate problems with VAT and customs issues should this not happen, and there is a no-deal Brexit.

  • Apply to HMRC for a UK Economic Operator Registration and Identification (EORI) number.  This is required to declare imports and exports to the EU27 countries after Brexit.
  • Consider appointing a customs agent to make import and export declarations.  Alternatively, off-the-shelf software packages are available to make the declarations.
  • Ensure freight forwarders have the right information to make full declarations for goods moving between the UK and EU27.

How to get help

The impact of Brexit on business is still unclear, as we approach the latest Brexit date. And there are still many twists and turns along the road ahead.  One of the benefits of working with tax specialists like Avalara is that that can help isolate businesses form some of the impact, while being there to suggest and support best practice to overcome changes.

Avalara helps businesses of all sizes achieve compliance with transaction taxes, including sales and use, VAT, excise, communications, and other tax types.  The company delivers comprehensive, automated, cloud-based solutions designed to be fast, accurate, and easy to use. The Avalara Compliance Cloud® platform helps customers manage complicated and burdensome tax compliance obligations imposed by state, local, and other taxing authorities throughout the world. 

Avalara offers more than 700 pre-built connectors into leading accounting, ERP, ecommerce and other business applications, making the integration of tax and compliance solutions easy for customers. Each year, the company processes billions of indirect tax transactions for customers and users, files more than a million tax returns, and manages millions of tax exemption certificates and other compliance documents.

For more information, please contact mark.carpenter@avalara.com.

Mark Carpenter

Mark Carpenter

Mark Carpenter has spent the last 5 years at Avalara, trying to keep up with the constantly changing and complex world of global tax compliance. Having spent many years within the payments industry, as well time as working for Amazon, Mark now manages partnerships for Avalara across EMEA.

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