On 29th March 2019 the UK will be leaving the European Community but what is still uncertain is whether it will be with a deal, which needs approval from the UK Parliament so far not forthcoming, or a no deal. In “a deal” scenario, a transitory period up to end of December 2020 will be triggered, with the EU rules still applying during this period so as to allow businesses to adapt to the changes. On the other hand, leaving with a “no deal” means that as from 30th March 2019 the UK will be considered a third country outside of the European Community. For businesses established in Malta which supply goods or services to the UK this carries the following implications:
- Goods (including distance sales of goods) supplied with transport commencing from Malta and ending in the UK will be treated as an importation by the importer of record in the UK. No VAT shall be due in Malta as they constitute an exempt export of goods (Customs export formalities apply).
- Goods (including distance sales of goods) supplied with transport commencing from the UK and ending in Malta shall be treated as taxable importation of goods in Malta and VAT shall be payable by the person making the importation (Customs import formalities apply).
- The rules for supplies of services shall continue to apply but B2B services supplied by businesses established in Malta to UK established businesses under Article 44 of the VAT Directive (the general rule) will have to be reported in Box 2 of the VAT Return and no recapitulative statement will be required.
- B2B services which fall within the scope of Article 44 of the VAT Directive and which are supplied by UK established businesses to businesses established in Malta will be self-charged in Boxes 4 and 7 of the VAT Return and corresponding deduction (if applicable) in Boxes 11 and 15.
- Certain services listed in Art. 59 of the VAT Directive supplied by businesses established in Malta to non-taxable persons established in the UK fall outside the scope of Malta VAT.
- Businesses established in Malta which provide telecommunication, broadcasting and electronically supplied services to non-taxable persons established in the UK, such as gaming companies, will not be able to account and charge VAT (if any) through MOSS and it is presumed that if the supplies made are taxable in the UK, they shall have to register for VAT purposes in the UK.
- Tour operators established in Malta shall not charge VAT on the profit margin when they re-sell UK travel, hotel, holiday and other related services to travellers.
- Businesses established in Malta which incur VAT in the UK will not be able to claim it under Directive 2008/9/EC (Refund of input VAT to taxable persons not established in the Member State of Refund) – it is yet to be seen how the UK will treat these refund claims.
- Verification of UK VAT registration numbers on VIES will be disabled.
Do the above implications have any impact on your business? Do you need further clarification or assistance? Do you have any doubts?
Contact our VAT team on info@zampadebattista.com for any assistance you may require.
