Brexit - end of the transitional period and VAT

Brexit - end of the transitional period and VAT 

Adam Sękowski, Tax Manager
Brexit - end of the transitional period and VAT
On 31 December 2020, the so-called transitional period for the UK's exit from the European Union will come to an end. 

During this period, there have been no fundamental changes in relations between Poland and the United Kingdom in terms of tax issues, but once this period has come to an end, entrepreneurs should pay attention to significant changes concerning VAT settlements.

  • Intra-Community acquisition of goods -> import
  • Intra-Community supply of goods -> export

During the transitional period, transactions between the EU and UK entities have been settled for VAT under the current rules, i.e. the rules applicable to intra-Community supplies and intra-Community acquisitions of goods.

As from 1 January 2021 the United Kingdom will not be subject to EU VAT legislation as it has lost Member State status as a result of Brexit. This will lead to a change in the nature of commercial transactions. Transactions such as intra-Community supply/acquisition of goods and distance selling will no longer take place, but instead there will be exports/imports of goods.

In the case of service transactions with the UK, such transactions will be treated as transactions with third countries - non-EU countries.

  • Fiscal representative

After 1 January 2021, entities from the United Kingdom which are obliged to register for VAT purposes in Poland, i.e. those carrying out activities such as trading in this country or exporting, will have to appoint a fiscal representative.

An entrepreneur from the UK will be required to appoint a fiscal representative if he or she meets jointly the following requirements:

  • is a taxpayer referred to in Article 15 of the VAT Act, i.e. performs its own economic activity within the meaning of VAT regulations,
  • has no registered office or permanent place of business in the territory of Poland or any other EU country,
  • is obliged to register in Poland as an active VAT payer.

The duties of a VAT fiscal representative include:

  • settling tax for a foreign entity, including preparation of tax returns, summary information, keeping records and documentation, as well as
  • carrying out other activities under the provisions of law, if authorised to do so under the contract (e.g. representation during a tax audit)

A fiscal representative may be an entity which fulfils certain conditions regulated by the legislation. There is a legal requirement to sign a formal contract between the taxpayer and the fiscal representative. Moreover, the fiscal representative is jointly and severally liable with the taxpayer for all VAT obligations.

Companies of the Crowe group provide fiscal representation services for non-EU entities:

Learn more

Contact our expert

Małgorzata Dobrowolska
Małgorzata Dobrowolska
Partner, Director in Accounting Department

VAT compliance and fiscal representative for non-EU companies