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How Brexit will affect VAT tax matters related to trade with the EU.

The EU Directive 2006/112/EC concerning the common system of VAT taxation is still valid after the 31st of January 2020 (Brexit date). A transitional period will continue until the end of 2020. This period could be prolonged from 12 to 24 months if the UK makes a formal request for this, by the 1st of July 2020. What also changes for the UK is a method used for Tax Refunds of VAT overpaid to the EU. EU VAT refund system is a centralized, digital system that applies to all 28 member nations, which means businesses could efficiently apply for EU VAT refunds electronically. After Brexit, UK businesses have lost this privilege, and will need to submit claims for EU VAT refunds by physical documentation (carrying higher costs and administration). During the transition period, electronic VAT refunds can be filed by U.K businesses until the 31st of March 2021.