Brexit

The UK parliament and EU Commission have now ratified the trade agreement between the UK and EU so the UK ceased to be a member of the union on 23:00 Dec 31st 2020. There is no change to the application of VAT which will continue to be applied to purchases by UK buyers from vendors in either the UK or EU. Likewise, VAT will continue to be applied to purchases by EU buyers from vendors in either the UK or EU.

The information available from the UK government at the moment is that nothing needs to change as it seems UK leaving the EU will not affect any aspect of how VAT is collected or how the VAT system operates. As a result there is no need to release a 'brexit' version of the VAT plugin.

However, because we are a UK company and now outside the EU VAT system and because we will be unable to test our plugins if the VAT systems operated by the EU and UK diverge we have decided the plugin will not be available to buyers from any EU member state.

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Instead, the changes you need to make affect where you send any VAT you collect. According to the UK tax authority (HMRC) the UK will maintain the same or parallel VAT system though outside the EU VAT system. This means that at the end of the transition period, UK vendors selling to buyers in EU member states will need collect VAT as it is collected today but send collected VAT payments, as what is called under the EU VAT directive a 'non-union' vendor, to a tax authority of an EU member state.

Similarly, vendors in the 27 EU member states will continue to collect VAT from sales to UK buyers but send collected VAT from UK buyers to the UK tax authority HMRC. That is, just as UK vendors will need to register with a tax authority of an EU member state, EU vendors will need to register with the UK tax authority. So the change required appears to be procedural not technical.