UK exits EU; leaves VAT regime 31 December 2020

The United Kingdom today leaves the European Union at 11pm GMT following the 2016 referendum decision. However, it remains inside the EU VAT regime until 31 December 2020. Read Avalara's Brexit VAT and Customs Guide for details on the changes that will come into effect in 2021, and measures to prepare for the new VAT and customs obligations.

Today, the UK is leaving the political structures of the EU, including: the Council, Commission; Parliament; and the European Court of Justice (ECJ). However, as part of an agreed 11-month transition period, it remains within the EU trading structures: the EU VAT regime; the Customs Union; and Single Market. The UK will still have to incorporate all EU VAT changes into its VAT Act during the rest of this year, and still be subject to the rulings of the ECJ. Only in January 2021 will the UK be able to materially diverge from the EU VAT Directive.

The means there will be no change to the VAT treatment of transactions, or the VAT reporting requirements for UK and EU businesses carrying out cross-border business. This includes EU-related filings, such as Intrastat and EC Sales Listing.

UK and EU trade will still be subject to no tariffs, customs declarations or checks during the same transition period.