Brexit and VAT...UK Brexit paper EU Brexit paper UK will leave Single Market but will seek an...
18
Brexit and VAT Webinar Mark Agnew | London David Jamieson | London Daniel Lund | London Benjamin Bergau | Frankfurt 31 May 2017
Transcript of Brexit and VAT...UK Brexit paper EU Brexit paper UK will leave Single Market but will seek an...
Brexit and VAT
Webinar
Mark Agnew | LondonDavid Jamieson | LondonDaniel Lund | LondonBenjamin Bergau | Frankfurt
31 May 2017
Agenda
1 A short summary…
What do we know so far?
2 Governing law and case law
3 Practical aspects
Big VAT decisions for the Government
Impact on different industries
What should you consider?
4 A view from the EU
5 What next?
1 A short summary…
Image Source: Guardian.com; DailyExpress, BBC.co.uk, WSWS.org, Express.co.uk, City A.M, thesun.co.uk, Business Standard,
Image Source: Cagle.com: by Marian Kamensky (UL); Cagle.com: by Paresh (UR); Telegraph: by Christian Adams (LL); the Economist: by KAL (LR)
© 2017 Baker & McKenzie LLPDocID 9222143
What do we know so far?
6
UK Brexit paper EU Brexit paper
UK will leave Single Market but will seek an ambitious and comprehensive free trade agreement, acknowledging that Britain "cannot agree new trade deals until after it leaves the EU"
For the financial services industry (particularly card industry), it describes the City as Europe’s only global hub for money, trading and investment on which the EU will continue to rely
Any free trade agreement cannot amount to participation in the Single Market or parts thereof
A single financial settlement covering all commitments as well as liabilities, including contingent liabilities must be agreed.
No separate negotiations between individual Member States and the United Kingdom
Tra
de
Tra
de
Wherever practical and appropriate, the same rules and laws will apply in the UK on day 1.
End the jurisdiction of the CJEU in the UK and establishing a new mechanism for resolving future disputes between the UK and the EU.G
ov
ern
ing
law
Go
vern
ing
law
Until it leaves the Union, the UK remains a full Member of the EU, subject to all rights and obligations set out in the Treaties and under EU law, including the principle of sincere cooperation.
Securing rights of EU nationals living in the UK and vice versa will be UK’s early priorities.
Fre
ed
om
s
Fre
ed
om
s No "cherry picking" of EU freedoms
Guarantees, status and rights of EU citizens and families will be the first priority for the negotiations
Relationship with Ireland to be strengthened and developed
Irela
nd
Recognition of UK and Ireland agreements that are compatible with EU law
Irela
nd
2 Governing law and case law
© 2017 Baker & McKenzie LLPDocID 9222143
VAT | Governing law
8
New VAT Act ahead? VATA 2019…?
Great Repeal Bill: convert directly-applicable EU law (EU
regulations) into UK law and preserve UK laws that
implemented EU obligations
However, a lot of the UK VAT law will not make sense on
day one
‘Member States’ mentioned in most sections of the VATA
Need to re-define UK VATable transactions: eg,
‘Acquisitions’ obsolete?
Transitional period required?
© 2017 Baker & McKenzie LLPDocID 9222143
Post-Brexit periods, CJEU judgments will no longer be directly applicable
UK Supreme Court will be the most authoritative court for
interpretation of VAT law in the UK
Post-Brexit, CJEU judgments will be given status of UK Supreme
Court judgments, so can be subsequently reviewed by that court
Need to develop dispute resolution mechanism with the EU
CJEU case law
9
VAT
No more Dutch potato cases
No more German sausage cases
No more Baltic mythological path cases
Future CJEU judgments will still be used as reference for interpretation while UK VAT law mirrors EU law
CJEU case law will still be relevant for pre-Brexit periods for up to 4 years post-Brexit
No more CJEU means… …But
Image sources: http://hdhut.blogspot.co.uk/2011/12/29-wallpapers-of-sad-and-crying-babies.html ; http://www.pescetarianjournal.com/spiced-roasted-red-dutch-yellow-baby/;
https://www.dreamstime.com/royalty-free-stock-photos-sausage-image12887758; https://www.pinterest.com/pin/214906213439058104/;
http://www.palangatic.lt/en/things-to-do/baltic-mythology-park/
3 Practical aspects
© 2017 Baker & McKenzie LLPDocID 9222143
Big VAT decisions for the government
11
The UK can have its own way on
VAT exemptions on financial services and fund
management
Insurance intermediation exemption
VAT grouping rules
VAT recovery for holding companies
VAT rate for solar panels
Abuse of law
Single and multiple supplies
Other EU principles?
VAT rates
New indirect taxes?
The UK will continue to apply
The UK has new freedom on
Image Source: Express.co.uk
© 2017 Baker & McKenzie LLPDocID 9222143
Impact on different industries
12
Very proactive industry; ongoing discussions with
Government
UK providing assurances to companies
Decisions on-hold waiting for more clarity
PRA contingency plans
Passporting rights
Financial Services
EU supply chains
Import/Export transactions
volume
Distance selling and
MOOG
Manufacturing/
goods
MOSS
TOMS
Vouchers
B2C
Services
IND
US
TR
Y
INS
IGH
T
4 A view from the EU
© 2017 Baker & McKenzie LLPDocID 9222143
A view from the EU
14
Perception across EU?
Harmonized VAT law for EU27
No imminent actions and changes to be expected
Intra-Community supplies become export supplies; no triangulation
Distance selling regimes
Change of tax places for supplies of services to private customers
Overall rather administrative burden, i.e. because of customs procedure
Relocation of head office, structuring branches
Structuring supply chains and handling of customs clearings
Applications for procedures otherwise granted only within EU
territory
Adjustment of accounting software
Contract review concerning indirect tax-related conditions
Future divergent law perceived as a trade barrier
Current uncertainy further aggravates business decisions
Generally awaiting course of negotiations and interim events
European Law?
Preparation?
5 What next?
More/less compliance
measures?
EU supply
chain analysis?
Futureproof
contracts?
Proactively
approaching the
Government?
Industry initiatives
on Brexit?
© 2017 Baker & McKenzie LLPDocID 9222143
UK elections in June 2017 —Theresa May likely to remain in power (and she claims that she will not raise VAT rates!)
Brexit negotiations to kick-off after elections.
Yet to come…
17
Key questions:
What will be the UK’s trade
relationship with the EU27?
What will be the UK’s trade
relationship with ROW?
Will the UK seek to maintain a
high degree of similarity
between UK and EU law?
Image sources: http://www.telegraph.co.uk/news/2016/11/29/donald-tusk-accuses-british-voters-backed-brexit-creating-
anxiety/; The Telegraph: Photo credit to KRISZTIAN BOCSI/BLOOMBERG FINANCE LP
Baker & McKenzie LLP is a member firm of Baker & McKenzie International, a Swiss Verein with member law firms
around the world. In accordance with the common terminology used in professional service organisations, reference to a
"partner" means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an "office" means an
office of any such law firm. This may qualify as “Attorney Advertising” requiring notice in some jurisdictions. Prior results
do not guarantee a similar outcome.
© 2017 Baker & McKenzie LLP
www.bakermckenzie.com
