Meeting the challenges that Brexit will bring

With Brexit only a year away, the UK does not seem any closer to negotiating a trade deal with the EU.

By Helen Cowley, senior director and tax specialist at Cassons, part of the Baldwins Group.

This may affect UK businesses importing into the EU and trading in the Single Market, since imports to the EU are liable to import VAT at the border but can then move freely between member states.

Following Brexit, it may not be possible for goods to move freely between the UK and other EU member states.

You may therefore consider importing directly into another EU member state if your business is trading in that member  state.

Looking specifically at Germany, goods imported from non-EU states to Germany are liable to import VAT known as “Einfuhrumsatzsteuer” generally at its standard rate of 19 per cent.

The business acting as importer is liable to pay the import VAT at the border, which can be recovered through its VAT return if it is registered for VAT in Germany.

An exemption from import VAT for goods which are subsequently supplied within the EU may be available in certain circumstances.

The exemption must be applied for in advance and is only granted if, at the time of importation, the goods, customer and destination can be identified.

In most cases, documentation can be quite difficult and it is therefore more usual for Einfuhrumsatzsteuer to be paid and subsequently reclaimed. Of course, there are many other practical, commercial and tax implications to consider and it is imperative that expert professional advice is taken in advance as the recommended and available courses of action will depend of the facts of each case.