The United Kingdom of Great Britain and Northern Ireland has ceased to be a member state of the European Union and has been considered a third country as of January 31, 2020, once ratified the Agreement on the Withdrawal of the United Kingdom from the European Union and the European Atomic Energy Community (or “Withdrawal Agreement”). However, after lengthy negotiations and a transitional period, this withdrawal has displayed its tax effects since January 1, 2021, affecting both economic operators and individuals.
It is important to bear in mind, however, that the Withdrawal Agreement incorporates a special Protocol on Ireland / Northern Ireland that was approved in extremis to respond to specific situations in these territories, derived, among others, from the circumstance that they share insular territory with the Republic of Ireland, which is part of the European Union.
One of the first consequences that have occurred, since the Kingdom is considered a third State, is that businessmen established in that country will no longer have the right to a refund of the VAT quotas they support in Spain through the return mechanism of the article 119 of the Value Added Tax law (“VAT law”), applicable to businessmen in the European Union and must do so through article 119 bis, as of January 1.
This last article constitutes the transposition of the thirteenth Directive 86/560 / EEC, of ​​November 17, 1986, on the harmonization of the laws of the Member States for the purposes of refunding VAT to non-taxable persons not established in the territory of the Community, the Canary Islands, Ceuta or Melilla.
Let us remember that one of the fundamental requirements for its application was, specifically, that of the existence of reciprocity of treatment with the state of establishment of the applicant, so that the VAT paid in Spain will only be returned if, in this case the Kingdom United, returns the VAT paid to Spanish businessmen.
In this sense, and as expected, on January 5 the Resolution of the General Directorate of Taxes was published, of January 4, on the refund of VAT to businessmen or professionals established in the territories of the United Kingdom of Great Britain and Northern Ireland, which recognizes such reciprocity with the following limitations of the fees paid:
a) For goods and services acquired that do not affect business or professional activity.
b) For goods and services that are intended for resale.
c) For goods and services of entertainment or services of a recreational nature.
d) For the acquisition of a motor vehicle or 50 percent of the VAT paid for its rental or financial lease.
The resolution is consistent with the existence of the aforementioned Protocol for Northern Ireland since it is agreed that this territory is part of the European Union in everything related to deliveries, intra-community acquisitions and imports of goods. This means two things: on the one hand, businessmen will be able to request the refund of the VAT quotas borne by these operations related to goods in Northern Ireland as before, that is, by the mechanism of article 119 of the VAT law and on the other hand, with regard to the quotas paid in the provision of services, the mechanism of article 119 bis will be applied with the established limitations.

Likewise, it is also a requirement to request the refund for those not established in the European Union the obligation to appoint, in advance, a representative who is resident in Spain (VAT application territory) who is in charge of complying with the formal obligations and that responds jointly and severally if the return is inappropriate.
Los efectos del Brexit se extienden a la aplicación del IVA y a la legislación aduanera en general, para todos los operadores económicos. Sin ir más lejos, cualquier operación de introducción de bienes en el Reino Unido (a excepción de Irlanda del Norte) por empresas españolas será considerado una exportación desde el punto de vista español y una importación en el Reino Unido (a excepción de Irlanda del Norte), y viceversa. En definitiva, que ya no será considerado ni entrega ni adquisición intracomunitaria.
The effects of Brexit extend to the application of VAT and customs legislation in general, for all economic operators. In fact, any operation of introduction of goods in the United Kingdom (with the exception of Northern Ireland) by Spanish companies will be considered an export from the Spanish point of view and an import in the United Kingdom (with the exception of Northern Ireland), and vice versa. Ultimately, it will no longer be considered either intra-community delivery or acquisition.
The direct consequence is that these commercial exchanges are already subject to all customs procedures and formalities to verify compliance with Community legislation as well as, where appropriate, to obtaining prior authorization or certificate from the competent authorities, regardless of whether there is an agreement on the non-existence of tariffs or quotas on merchandise. This happens with regard to agri-food products, for example, as they are subject to authorization or a certificate that must be processed electronically to the inspection services before dispatch, through their computer platforms.
Additionally, VAT on imports of goods will be accrued and settled at the time of importation by Customs, unless the company chooses to apply the deferred VAT regime, for which it must submit monthly declarations. If it is not a large company and your declaration period is quarterly, you may choose to modify your declaration period by registering in the Monthly Refund Registry (REDEME). However, it must assess the counterpart that will entail being obliged to keep books through the Immediate Information Supply system (SII).
Another not inconsiderable effect in the current economy is that, for those entrepreneurs who supply goods to private customers in the United Kingdom, the intra-community distance sales regime will not apply, except for deliveries to residents of Northern Ireland.
Regarding other formal aspects, given that the operations carried out between Spain and the United Kingdom are no longer classified as intra-community, they should not be reported through the recapitulative declaration model 349. Nor will they have the obligation to identify themselves by VAT-NIF.
Finally, special taxes will accrue at the time of importation of goods from the United Kingdom such as alcoholic beverages or manufactured tobacco.
Also the acquisition and provision of services will be affected, for example, with the application of the localization rules provided in articles 69 and 70 LIVA, since the United Kingdom ceases to belong to the European Union, the special rule of effective use of article 70.Dos. will be applied. This will mean that the following services will be subject to Spanish VAT when they are located in the United Kingdom but their effective use or exploitation is carried out in the territory of application of VAT.
1.º Those listed in article 69.Two, whose recipient is an entrepreneur or professional acting as such: assignments and concessions of intellectual or industrial property rights, goodwill, advertising, advice, auditing, engineering, law, tax experts, data processing and the supply of information, insurance and financial, leasing of personal property.
2.º Mediation on behalf of another whose recipient is a businessman or professional.
3. The leasing of means of transport.
4.º The services provided by electronic means, telecommunications, radio broadcasting and television.

Not of less importance, in a globalized economic environment, are the consequences of the non-application of those technical rules that simplify the application of VAT, such as those applicable to triangular operations or the supply and installation rules, to companies that are registered only in the UK for VAT purposes. This may require that they register in any other EU state, which may represent a business opportunity for tax advisors from other countries, such as Spain.
Ultimately, from now on from this perspective it will be necessary to analyze the commercial operations in which the United Kingdom intervenes and, in some cases, rethink their operating scheme for a greater VAT optimization.
Article published by the Director of the Tax Department of addwill, Sònia Buxaderas, in number 333 of Món Jurídic magazine.