Despite the latest indecision and disarray concerning how the United Kingdom (U.K.) will formally leave the European Union (EU), there is at least one Brexit prediction that business and tax leaders can take to the bank: No matter what happens, indirect tax management will get even more complicated for companies that do business in the U.K.
Overall business costs are likely to increase as well. The rise in cost and complexity stems from the fact that changes to the U.K.’s current value added tax (VAT) rules and interpretations (which no longer will be based on EU VAT principles and case law) as well as uncertainty about trade agreements (resulting in more complex supply chains) are all but assured to follow in the wake of the U.K.’s formal departure (i.e., the completion of the Article 50 process).
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To be sure, there is still technically time for a range of Brexit outcomes. As business and tax leaders monitor daily Brexit twists and turns, they should keep an eye on the following dates:
October 17-18: EU leaders meet for the final European Council Summit, two weeks before the U.K.’s current extension is due to expire.
October 31: The six-month extension to the Article 50 process expires. If no other agreement is reached, the U.K. will leave the EU. (Prior to Oct. 31, further extensions of the current Brexit deadline are possible.)
Nov. 1: If a no-deal departure occurs, the U.K. is no longer part of the EU from this point onward. It is important to keep in mind that a no-deal departure still requires the U.K and the EU to reach new terms on trade, border arrangements, dispute resolutions and more. (In other words, more uncertainty will follow.)
Nov. 1: If another extension is agreed upon, the negotiations – as well as the indecision and disarray – will continue.
Nicole van Wandeloo is Manager of Tax Research with the Vertex Indirect Tax Research department, where she is responsible for the EMEA VAT content for Vertex O Series. Nicole has more than 20 years of international experience in VAT advisory, VAT compliance, and process automation, both in consulting and as an in-house VAT manager. She also holds a master’s degree in Tax Law.
The outcome of the recent US Presidential election surprised many, and it is just one more in a string of recent drivers of global economic, legislative, and regulatory uncertainty. Brexit, EU State Aid investigations, and the OECD Base Erosion and Profit Shifting (BEPS) Actions figure most prominently among these disruptions; each will significantly influence foreign direct investment, trade, banking, corporate taxation, and the exchange of tax information between jurisdictions.
Watch our joint webcast with PwC, as we discuss how the Wayfair ruling affects European business and the challenges they may face. As well as the next steps firms can take, including the advice and tools available to help them meet these compliance challenges.
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