Sunday, 11 February 2018
Information for UK stamp dealers about EU VAT rules
PLEASE NOTE THIS POST HAS BEEN UPDATED AND IS LIABLE TO FURTHER CHANGE
According to the Financial Times, the EU Commission has issued guidelines on post-Brexit scenarios which include information which entails that if the UK does not negotiate a VAT agreement with the EU before leaving the bloc, UK small businesses that are currently exempt from paying VAT because they generate turnover of less than £85 000 a year will have to start paying VAT on sales to EU customers, presumably charged to the customer at the point of entry into the EU country. Unless the customer is in turn a EU VAT registered company, then the overall effect would be to increase prices significantly to the final customer. There would also be attendant delays in handling (as there are currently, for example, for goods sent from non-EU Switzerland to the UK).
The current bespoke situation is that the EU allows the UK a threshold for VAT registration much higher at £85 000 (about 95 000 euros currently) than in any other EU country. This is very favourable to the UK. Under this threshold, small and semi-retired dealers (like me) can sell anywhere in the EU without charging VAT, either at the UK rate or the rate applicable in the country of destination. The situation only changes for the non-VAT registered UK dealer when sales to a single other EU country exceed a certain threshold, most often 35 000 euros, at which threshold the UK-based dealer has to register in that country for VAT purposes.
In contrast, in other EU countries the general VAT registration threshold is set much lower on total sales so that dealers in other EU countries are currently at a competitive disadvantage. In five countries of the EU, the VAT registration threshold is NIL (Greece, Hungary, Malta, Spain, Sweden).