Brexit - Transitional measures

11 February 2020 - As of 1 February 2020, the Brexit is a fact. During the transitional period that runs until 31 December 2020, the United Kingdom will be treated as an European Union Member State. In this period, the United Kingdom and the EU will enter negotiations for a new trade agreement.

The main points 

In the Netherlands they published an explanatory memo providing for some clarifications with respect to the status of employees and individual entrepreneurs, indirect taxes and overall tax position of your business until the end of 2020. We have listed the key points that still apply up to and including 31 December 2020.

Employees and individual taxpayers

All United Kingdom residents will remain treated as residents of the EU for the period up to and including 31 December 2020. In particular:

  • United Kingdom residents who meet conditions for a qualifying non-resident taxpayer in The Netherlands may remain a qualifying non-resident taxpayer for the entire Dutch tax year 2020;
  • United Kingdom residents retain the right to the employee’s tax credit and the income-related combination tax credit for the entire tax year 2020 if they meet the conditions for those tax credits;

VAT and Customs

  • It has been emphasised that EU rules for indirect taxes will continue to apply in the United Kingdom up to and including  31 December 2020.

Business entities

  • The application of the participation exemption will apply throughout the entire calendar year 2020;
  • For the fiscal unity with a top or intermediate company in the United Kingdom, the application of the fiscal unity regime remains unchanged throughout the entire calendar year 2020;

The withdrawal agreement provides for a possibility for the extension of transitional period but at the moment it is unclear whether this will happen. It is important to understand that tax provisions mentioned above will suffer changes and steps to limit the risks should be taken.

Want to know more?

Would you like to know what the Brexit transitional period means for your company and how you can secure your tax position? Please contact Eline Polak by e-mail or by telephone: +31 (0)88 277 23 25. For specific questions about the impact on your staff, please contact Alexander Rasink by e-mail or by telephone: +31 (0)88 277 16 15. They will be happy to help you.