VAT implications of BREXIT (II)

Following the results obtained in the elections of 12 December last in the United Kingdom, it is appropriate to review the dates of the possible entry into force of the Brexit in order for companies with interests in that country to adopt the appropriate measures already commented on in our AddNEWS of October.

On 29 October 2019, the European Council extended the application of the Brexit programme until 31 January 2020, in accordance with Article 50 of the Treaty on European Union.

However, if the ratification and notification procedure takes place in December 2019 or January 2020, the Withdrawal Agreement will enter into force, respectively, on 1 January 2020 or 1 February 2020.

Please note that once the United Kingdom’s exit from the European Union becomes effective, its status will change and it will have to be considered as a “third country”.

It should be noted that, without prejudice to the above, the Withdrawal Agreement provides for a transitional period until 31 December 2020, during which Community legislation will continue to apply in the United Kingdom in relation to the internal market, customs union and Community policies.

However, if the agreement is not in force by the date of departure, the United Kingdom will be treated as a third country, without any specific preference.

In this regard, given that this situation could have a significant effect on the organisation and/or logistics flows of economic operators, we recommend that those entities that have not yet done so evaluate this impact and bring forward, as far as possible, the necessary procedures.