Tax Implications of BREXIT

Since February 1st, 2020, the United Kingdom ceased to be part of the European Union, however, throughout the year 2020 a transitional period continues to be applied in which the European Community rules are still applicable in relations with the United Kingdom. Nevertheless, as of next January 1st, 2021, said transitional period ends and the United Kingdom will be considered from then on a third country for all purposes. Some of the tax implications of this exit will be:

  1. Sales to the United Kingdom will become exports, so invoices will be exempt from VAT.

  2. Purchases from the United Kingdom will have the character of imports, so that the VAT on import must be settled at customs, as well as the duties and special taxes that may be required.

  3. Operations should no longer be included in form 349 or in the Intrastat declaration.

  4. Dividends paid to parent companies in the United Kingdom will be taxed according to what is established in the double taxation agreement between Spain and the United Kingdom. 10% in the event that the participation in the subsidiary is less than 10% of the capital and exempt if the participation is equal to or greater than 10%.

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