Brexit Implications

brexit-eu-referendumNo matter what will be decided in the upcoming weeks, the upcoming months will remain status quo. Corporate taxes, VAT and indirect taxes, and financial services in Europe will continue as before the referendum.

Proactive steps to take now to safeguard your business:

  • Keep all original invoices
  • Save all original receipts
  • Expect changes to Directive 8th (2008/9/EC) delivery methods

Three days have passed since the UK voted to leave the EU. Since then, the UK has been in turmoil. 2.5M people have signed a parliamentary petition calling for a second EU referendum, more than 150,000 people have signed another petition calling on the London Mayor to declare the capital independent of the UK and apply to join the EU, and Scotland has already called for a referendum to become an independent country and stay part of the EU. In addition, senior Labour figures called for parliament to overturn the referendum result.

The British Parliament still needs to decide whether they will move forward with Brexit (British exit from the European Union). But with the international markets crashing, top EU leaders are calling for the UK to leave as soon as possible as any delay in Brexit would “unnecessarily prolong uncertainty.” The formal Brexit letter of resignation would invoke Article 50 of the Lisbon treaty.

What is Article 50? In short, Article 50 of the Treaty on European Union allows a member state to notify the EU of its withdrawal and obliges the EU to try to negotiate a ‘withdrawal agreement’ with that state. Once the member state notifies the European Council of its intention to leave the Union, arrangements will be made for its withdrawal, taking into account the framework for its future relationship with the EU.

The member state’s existing treaties cease to apply from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification was received, unless the European Council, in agreement with the member state, unanimously decides to extend this period.

During the two-year negotiation period, EU laws would still apply to the UK. The UK would continue to participate in other EU business as usual, with the exception of internal EU discussions or decisions on its own withdrawal. In this two-year window, a new treaty would be negotiated to replace the terms of the EU membership.

It is important to remember that the Brexit vote does not represent a formal notification. This notification could take place within the upcoming days, or British officials may elect to wait a few months before invoking Article 50.

 

Watch our Webinar on Brexit where we provide updates which pro-active steps you can take to ensure a smooth way to recover your Indirect Taxes.

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