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2018 World Tax J. 3 (2018)

handle is hein.journals/wldtxjrn2018 and id is 1 raw text is: Servaas van Thiel* and Marie Lamensch** Possible Consequences of Brexit in the Area of Indirect Taxation: Why Prime Minister May Talks about a Hard Brexit, but Really Needs a Soft Brexit! The Brexit referendum of June 2016 gave rise to tremendous confusion in the United Kingdom, the European Union and internationally. In her subsequent presentations and White Papers, Prime Minister May appeared to be trying to calm the political waters at home by reassuring the people of Britain that Brexit is Brexit and that UK sovereignty and control of immigration would take precedence over trading with the European Union. The objective of this paper is to explain that, even though these statements may have served a domestic political purpose, a hard Brexit - under which the United Kingdom would become just a third country without any preferential economic relations with the European Union - would reintroduce significant trade obstacles that should not be taken lightly. This paper focuses in particular on the indirect tax obstacles for UK exports to the European Union, including customs duties and related procedures, the harmonized value added tax system and the loss of protection against indirect tax discrimination. The overall conclusion is that a hard Brexit will have a considerable cost for UK businesses and for the UK economy in general. Contents 1. What Brexit Is and Could Be 4 1.1. The referendum and the ensuing uncertainty 4 1.2. Towards a new EU-UK relationship? 9 1.3. Brexit is Brexit? 11 2. Customs Duties 14 2.1. From the internal market without customs duties and charges with equivalent 14 effect ... 2.2. to the Common Customs Tariff and the Union Customs Code ... 15 2.3. and other possible obstacles to trade 17 2.4. Conclusion 19 3. EU VAT on Supplies between the United Kingdom and the European Union 20 3.1. UK supplies to EU clients become imports into the European Union 20 3.2. Can the pains of sovereignty be soothed? 24 3.3. Conclusions 27 * © Servaas van Thiel and Marie Lamensch, all rights reserved. Professor Van Thiel works for the European Union, teaches at the Free University Brussels and the Wirtschafts-Universitaet Wien, and is a part-time judge in the Regional Court of Appeal (the Netherlands). The observations in this paper are personal and cannot be attributed to the organiza- tions mentioned. Professor Lamensch teaches at the Free University Brussels, the Universite Catholique de Louvain and the Katholieke Universiteit Leuven. She is a member of relevant expert groups of the OECD, the World Customs Organization and the European Commission. The observations in this contribution are personal and cannot be attributed to the organizations mentioned. WORLD TAX JOURNAL FEBRUARY 2018 13 0 IBFD

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