According to European Council President Donald Tusk, a special place has been reserved in the afterlife for those seeking to bring about a hard Brexit without a plan. By “special,” Mr Tusk didn’t mean “nice.” What he meant was that Boris and Nigel won’t be needing to pack their winter clothes for life in the forever after.

Unsurprisingly, such comments have merely served to fan the flames of the already white-hot Brexit debate. But, away from the fiery rhetoric, member states are at least beginning to make preparations for a no-deal Brexit in an attempt to cushion the blow for taxpayers and businesses. How effective they will be is another matter.

In the Netherlands, State Secretary of Finance Menno Snel informed parliament late last month that the Tax and Customs Administration is preparing for the UK’s withdrawal from the European Union without an agreement.

Then, a few days later, Snel told lawmakers that the Government may put in place a “temporary transitional tax law” to provide certainty for business and individual taxpayers who may be negatively affected by a no-deal Brexit. This is intended to provide Dutch taxpayers with interests in the UK with the same tax treatment as if the UK hadn’t exited the EU, until the end of 2019.

Ireland, arguably the country most at risk from any negative impact – for security as well as economic reasons – is also preparing for future scenarios, worst case or otherwise. On February 6, 2018, Ireland’s Finance Minister, Paschal Donohoe, confirmed that the Government proposes to introduce a system of postponed accounting for VAT should there by a no-deal Brexit. This means that VAT-registered businesses importing goods from the UK will be able to account for import VAT on their VAT return, rather than having to pay import VAT on or soon after the time that the goods arrive at the Irish border – a measure intended to alleviate expected cash-flow problems for businesses. The Irish Government is also making preparations at ports and airports to deal with the consequences of what it calls a “disorderly Brexit.”

For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look

united kingdom