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Brexit tax advice for non-residents

March 14, 2019

Ronny Langer, a Certified Tax Consultant at Küffner Maunz Langer Zugmaier, has been expounding on Brexit input VAT refund advice proffered by the Federal Central Tax Office (FCTO).

As Langer explains, with a forthcoming Brexit, “the UK will become a third country” and this will have an effect on the input VAT refund procedure for non-residents.

On 27 February 2019, the Federal Central Tax Office (FCTO), responsible for handling input VAT refunds for non-residents, published two letters via its website, which explain what the effects of a hard Brexit would be “in the absence of any transitional arrangements.”

The two letters provide guidance for taxable residents in Germany, who wish to apply for a VAT refund in the UK, and for taxable residents in the UK who wish to apply for a VAT refund in Germany.

German residents must forward their VAT applications for calendar year 2018 to the UK by 29 March 2019.

Langer writes, “Taxable persons wishing to apply for an input VAT refund in the UK for 2018 can now, of course, follow the FCTO’s recommendation and file an application via the BOP. This should be done as soon as possible. However, there is no reason for hectic activity. The right to the refund of the input VAT arose in 2018. Hence, the refund can, alternatively, be directly claimed in the UK after 29.03.2019.”  

He adds, “The UK will probably publish relevant information after the final decision on the timing and details of the Brexit has been made. Any application for a VAT refund would then have to be filed by 30.09.2019, as provided for in the 8th Directive for EU residents.”

As for UK residents, Langer explains that HMRC previously indicated that refund applications for 2018 should be filed by 5pm on 29 March 2019 via the British portal so they can be forwarded to other Member States in good time. However, Langer says, it remains to be seen whether this will be sufficient for applications to reach the FCTO by the end of the 29th, and applications received after this date will be deemed inadmissible.

He writes, “In this case, applications must be filed directly with the FCTO via the BOP. This requires prior registration with the BOP. Registration involves several processing steps and experience has shown that it can take several weeks to months. Taxable persons should therefore pay particular attention to applying for registration in good time prior the application deadline of 30.09.2019. If this time restriction becomes too tight, British taxable persons could, for example, use the BOP access of a consultant.

The FCTO also points out that, for applications via the BOP after 29.03.2019, original invoices must be received by the FCTO in paper form by 30.09.2019 and a certificate of taxable status from the HMRC must also be submitted.”

Langer concludes, “Refund applications for the year 2019 can no longer be filed via the HMRC electronic portal. These must be filed directly with the BOP. The formal requirements for taxable persons established in a third country will then apply. There is no need to submit separate applications for the period up to Brexit and beyond. In addition, the refund of all input VAT for 2019 can be applied for, according to the FCTO, until 30.09.2020, even if the UK is likely to be a third country from 30.03.2019. Only for refund periods from 2020 onwards must applications be filed within six months of the end of the calendar year.”

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