Brexit’s impact on taxation

The UK’s exit from the EU will bring changes to cross-border trade. Find out whether Brexit affects your company’s taxation and what measures or changes may be needed. Study the procedures and rules that apply to trading with non-EU countries. 

Please read the guidance below regarding how Brexit can affect your taxation. The effects will vary depending on whether the UK withdraws from the EU with or without an agreement.

Up-to-date information on Brexit is available on the website of the Finnish Prime Minister’s Office.

Exit without agreement – impact after the UK is no longer in the EU

Impact on citizens

Brexit has no direct impact on individual taxpayers’ income tax. There are some exceptions, however, such as work that is done in the UK and entitles to a tax credit for household expenses, and a voluntary pension insurance policy taken out in the UK. 

If you buy goods in the UK or bring removal goods from the UK to Finland, you must clear them at Customs. More information on the Customs website 

Brexit has no effect on car tax collected on vehicles imported from the UK to Finland.  

Impact on businesses

The UK turns into a non-EU country. All goods moving between the UK and the EU must be cleared at Customs.

Goods brought by a company from the EU to Finland are regarded as imports.

When an importer

Goods sold by a company from Finland to the UK are no longer regarded as tax-exempt intra-community supply. Instead, they will be treated as tax-exempt export sales.

Additional information:

The UK turns into a non-EU country. Sales of services between Finland and the UK will no longer be treated as intra-EU service sales or purchases. Sales of services to non-EU countries will be taxed in accordance with the provisions of the VAT Act concerning the country of supply. If, according to the provisions on the country of supply, the service sales take place outside the EU, the VAT treatment must always be checked with the country where the service is sold.

Please note that in these cases the service sales or purchases must not be entered in the sections “Sales of services to other EU Member States” and “Purchases of services from other EU Member States” on the VAT return. You must report the sales of services to non-EU countries in the VAT return’s “Turnover taxable at zero VAT rate” section. No recapitulative statement is submitted on sales to non-EU countries.

Read more about VAT in foreign service trade (in Finnish and Swedish)

VAT numbers of UK trading partners can no longer be verified after Brexit.

Until then, you can verify the validity of VAT numbers

The VAT taxpayer company must be able to prove, by presenting its accounting records if necessary, that is has been entitled to VAT-exempt intra-community supply to the UK, or that it had made an intra-community acquisition from the UK prior to Brexit. The above also concerns any other transfers of assets that the VAT taxpayer company may have made with a UK counterpart in advance of the date of Brexit. Note: after Brexit, VAT numbers of UK trading partners can no longer be verified.

If a Finnish company buys goods or services from the UK after Brexit and requests a VAT refund to foreigners, the request cannot be made in the ALVEU service. Please contact UK government services (Gov.uk) for instructions on VAT refunds.

If you have paid the value-added tax no later than on 31 December 2018, you can request a VAT refund in the ALVEU Online service as usual, for as long as the UK continues to be an EU country.

If purchases relate to the 2019 calendar year, up to the day of the UK’s exit, the VAT you had paid may be refunded to you. However, after Brexit you can no longer submit an electronic application in ALVEU. After Brexit, you must send your application to the UK. Please contact UK government services (Gov.uk) for instructions on VAT refunds.

Read more: Refund of VAT to Finnish businesses from other EU countries

If a UK company buys goods and services from Finland, they can request a refund of the value added tax included in the purchase price, provided that the company is not liable to pay VAT on sales conducted in Finland. After Brexit, you can no longer submit the application electronically. Apply for a refund of value-added tax from Finland on Form 9550.

Read more: Refund of VAT to foreign businesses established outside the EU

If you are registered in the VAT special scheme in Finland and sell services to UK consumers, you can no longer report these sales in the VAT special scheme when the UK is no longer in the EU. They must be reported directly to the UK. Further instructions are available from the UK tax authority.

File a tax return for tax period Q1/2019 (1.1.–31.3.2019) by 20 April 2019. In the tax return, also report any sales to the UK. Do not forget to pay VAT on the sales. Sales taking place after Brexit must be reported directly to the UK.

If the company’s current MSID is the UK, they must register in some other EU Member State in order to go on using the special scheme. They can also register for VAT in Finland.

The VAT on UK sales I reported in the Q4/2018 tax return was wrong. How can I correct the amount? 
File a correction through the VAT special scheme as soon as possible, before Brexit. After Brexit, all corrections must be submitted directly to the UK.

After the withdrawal from the EU, the UK no longer operates in the EU internal market and is therefore no longer within the scope of the duty suspension arrangement.

For companies with taxable EMCS movements from the UK to Finland, the procedure will change.

If the company is an authorised warehouse keeper, goods transported to the UK will be reported as exports in the EMCS system in future. Export declarations will then have to be submitted as instructed by Customs.

As goods are cleared with Customs, the company can convey them under the duty suspension arrangement, but this requires a registered consignor’s authorisation. The authorisation is granted by the Tax Administration. The company itself may act as the registered consignor. The goods can also be consigned by another company that has a registered consignor’s authorisation. The consignee must have a warehouse keeper’s or registered consignee’s authorisation.

SEED on Europa

In the SEED on Europa service, you can validate excise numbers and product details of an authorisation. Where UK trading partners are concerned, their information can be validated until Brexit takes place. 

More information on the handling of movements ongoing at the time of the withdrawal is available in the guidance published by the Commission (pdf)

The UK withdrawal from the EU has no direct impact on corporate taxpayers’ income tax.


 

Agreement reached and transition period begins – impacts

Impact on citizens

The UK turns into a non-EU country, but the free movement of goods between the UK and EU will continue throughout the transition period. The agreement contains an option that the transition period may be extended once.

Impact on businesses

The UK turns into a non-EU country, but the free movement of goods between the UK and EU will continue throughout the transition period. The agreement contains an option that the transition period may be extended once.

During the transition period, the current rules and guidelines relating to value-added tax and excise duties are applied.

During the transition period, the UK

  • will be in the EU internal market and the Customs Union
  • will comply with EU legislation and international treaties
  • will not participate in EU decision-making.

More information about the Brexit agreement, if an agreement is reached, will be provided later.

Read more

Further information on the European Commission’s website:

Information on The European Council’s website

Information on other authorities’ websites

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