Brexit transitional period until end of 2020 agreed with regard to VAT and customs

23 March 2018 – With approximately a year left before the United Kingdom is set to leave the EU, Brexit negotiators took an important step on 19 March 2018 with regard to VAT and customs. Among other things, it has been agreed that a transitional period will apply to indirect taxes up to 31 December 2020.

What will this transitional period entail?

The United Kingdom will leave the EU at the end of March 2019, but will still be able to trade freely without any changes from a customs and VAT perspective. This is because the country will stay in the customs union and the single market of the EU until 1 January 2021.

The Brexit will not be postponed

The transitional period will not apply across the board. For example, the United Kingdom will lose its vote in the EU as of 30 March 2019, since it will lose its EU membership on that date. However, the country will continue to enjoy the advantages of the single market and the customs union, including the applicable legislation.

Purpose of the transitional period

The transitional period is effectively meant to give the business community, as well as the relevant authorities, more time to prepare. This has been confirmed in a press release by the EU negotiator. Although the exact consequences of the Brexit following the transitional period are not yet entirely clear, you can already start preparing for them.

Recommendations from the Dutch government:

  • Perform a Brexit impact analysis to map the consequences for your business.
  • For larger trade volumes, consider setting up your own process for submitting customs declarations when trading with the United Kingdom.
  • Consider using the Automatic Periodic Declaration (Geautomatiseerde Periodieke Aangifte, GPA) system in combination with the Customs Management System (CMS) in order to set up an automated customs process.

Want to know more?

If you want to find out more about how the Brexit will affect your company and how you can prepare, please contact Eline Polak by email or by phone on +31 (0)88 277 23 25. She will be happy to assist.