UK and Spain set to review Gibraltar tax residency agreement

The UK and Spain are set to review how residents and companies based in Gibraltar are treated for tax purposes in a bid to tackle tax avoidance, it has been announced.

It comes after the Joint Coordinating Committee and Liaison Body met last month to discuss tax co-operation between the authorities of Spain and Gibraltar, resulting in the International Agreement on Taxation and the Protection of Financial Interests regarding Gibraltar.

If you or your company has interests in either territory, here’s what you need to know.

What will the review look at?

According to reports, the review will largely look at tax co-operation between the authorities of Spain and Gibraltar, the tax residence criteria for people and companies, and new procedures for administrative cooperation.

Who will the new rules affect?

The new rules will affect taxpayers who have interests in both jurisdictions, such as those registered in Spain but have property or work in Gibraltar, or vice versa. This could have significant tax implications for those living in Gibraltar but are determined to be a tax resident in Spain.

According to the International Agreement, conflicts may arise when persons meet any of the following criteria:

  • The person spends more than 183 overnight stays in Spanish territory;
  • The spouse – or partner in a similar relationship – and/or economically dependent ascendants and descendants, have their habitual residence in Spain;
  • The individual’s only permanent home is in Spain; or
  • At least two-thirds of the individual’s net assets are located in Spain.

In addition, Spanish nationals who transferred their residence to Gibraltar after 4 March 2019 will only be considered a tax resident in Spain.

Rules for companies

The review will also affect companies incorporated and managed in Gibraltar, where any of the following apply:

  • Most of their assets are located, or most of their rights are enforceable, in Spanish territory;
  • Most of their income is Spanish-sourced;
  • Most of the people in charge of effective management are tax residents in Spain; or
  • Residents of Spain politically or financially control the company, entity, or other legal form.

Provisions to take effect from the start of the next tax year

The provisions agreed in the international agreement will not come into effect until the next tax year. This means 1 July 2021 for Gibraltar and 1 January 2022 for Spain.

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Less than one month left to apply to SME Brexit Support Fund, businesses reminded

There is less than one month remaining to claim grant funding through the SME Brexit Support Fund, businesses have been reminded.

The initiative – which helps new and established businesses adapt to post-Brexit importing and exporting processes – will close to new applications on 30 June 2021.

If you need help trading overseas, here’s what you need to know.

What is the SME Brexit Support Fund?

Launched in response to Brexit, the grant funding scheme enables traders to access specialist training to help them adapt to new customs and tax processes, such as the rules of origin and VAT.

According to recent research, the vast majority of small businesses who trade overseas only do so with the EU, meaning many are unfamiliar with the complex international trading rules introduced at the end of the transition period.

How much can I get?

Traders who currently trade with the EU, or plan to do so in the future, can access up to £2,000 in grant funding. The cash can be used to pay for specialist training and professional advice – including accountant’s fees.

Who is eligible for support?

Eligible businesses will have been established in the UK for at least 12 months before applying, or currently hold Authorised Economic Operator status, and:

  • not have previously failed to meet its tax or customs obligations
  • have no more than 500 employees
  • have no more than £100 million turnover; and
  • import or export goods between Great Britain and the EU, or move goods between Great Britain and Northern Ireland.

The business should also:

  • complete (or intend to complete) import or export declarations internally for its own goods

OR

  • use someone else to complete import or export declarations but requires additional capability internally to effectively import or export (such as advice on rules of origin or advice on dealing with a supply chain).

When is the deadline?

The final deadline for applications is 30 June 2021, but the Institute of Chartered Accountants in England and Wales (ICAEW) has urged businesses to apply as soon as possible. This is because there is a limited amount of grant funding available.

How do I apply?

For more information about the application process, please click here.

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Just one month left to apply to EU Settlement Scheme: what employers need to know

EU workers have just one month left to apply to the EU Settlement Scheme to secure the right to live and work in the UK.

If you employ EU nationals, here’s what you need to know.

What is the EU Settlement Scheme?

European Union, European Economic Area (EEA), and Swiss citizens who lived and/or worked in the UK before the end of the transition period will be offered permanent residence, providing they meet the relevant criteria to stay.

The application process is free, but applicants must demonstrate that they are in the UK as a worker, student, or self-sufficient person. They are also required to provide a form of official ID (such as a passport or driver’s licence) and their National Insurance (NI) number, if they have one.

Workers who have lived in the UK for at least five years can apply for “settled status”, while those who have lived in the UK for less than five years can only apply for “pre-settled status”.

When is the deadline?

The scheme will close to new applications on 30 June 2021. If EU workers do not apply by that time, they may be forced to return to their country of nationality.

What do I need to do as an employer?

Employers should ensure that eligible workers are aware of the scheme and the consequences of not applying in time. You should encourage your employees to apply as soon as possible to avoid uncertainty and offer assistance where possible.

After 30 June 2021, a new digital system will be launched to help employers check proof of settled status. If you continue to employ a worker who has not received settled status, your business may be fined.

Where can I get more information?

To learn more about the EU Settlement Scheme, please click here.

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How will the EU’s Import One-Stop Shop impact traders in the UK?

The Import One-Stop Shop (IOSS) is set to come into force this summer under sweeping changes to EU VAT law. If your business supplies goods to consumers in the single market, this is what you need to know.

What is the Import One-Stop Shop?

The IOSS is a new electronic portal that can be used by businesses from 1 July 2021 to comply with their VAT e-commerce obligations on distance sales of imported goods.

It comes as the EU abolishes the rules waiving import VAT on commercial goods of a value up to €22, meaning all commercial goods imported into the EU from a third country or third territory will be subject to VAT irrespective of their value.

The IOSS can be used for business to consumer (B2C) sales where the goods are valued at €150 (£135) or less.

What are the benefits of the IOSS?

The new service will allow suppliers selling imported goods to buyers in the EU to collect, declare and pay VAT to the tax authorities in one single location.

Under current legislation, the buyer must pay VAT the moment the goods are imported into the EU.

It means that the buyer will not be faced with surprise fees when the goods are delivered.

How will the new rules impact UK traders?

At present, UK businesses (except those in Northern Ireland) selling physical goods to consumers in the EU must register for VAT in the Member State the goods are being imported. This creates considerable administrative challenges and limits international sales growth.

But from 1 July 2021, traders can register with the IOSS in a single Member State and be covered in the whole of the EU – much like the existing Mini One-Stop-Shop (MOSS) for B2C digital services.

Businesses in Northern Ireland remain subject to EU VAT law under the terms of the Withdrawal Agreement.

According to the EU tax authorities, the changes could save businesses up to €2.3 billion (£1.9 billion) a year in compliance costs.

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For support using the new Import One-Stop Shop (IOSS), please get in touch with our expert Brexit advisory team today.

What you need to know about the new EU VAT e-commerce rules

The new European Union cross-border VAT e-commerce rules are set to come into force on 1 July 2021.

If you move or supply goods to the EU or Northern Ireland, here’s what you need to know.

What are the new e-commerce rules?

The new regulations are designed to make life “simpler and fairer” for traders. In reality, this means addressing barriers to “cross-border online sales” and challenges “arising from VAT regimes for distance sales of goods” and for the “importation of low value consignments”.

What’s changing?

According to the EU tax authority, the main changes – set to come into force from 1 July 2021 – are as follows:

  • Online sellers, including online marketplaces and platforms, will need to register in one EU Member State and this will be valid for the declaration and payment of VAT on all distance sales of goods and cross-border supplies of services to customers within the EU.
  • The existing thresholds for distance sales of goods within the EU will be abolished and replaced by a new EU-wide threshold of €10,000.
  • Below this €10,000 threshold, the supplies of telecommunications, broadcasting and electronic (TBE) services and distance sales of goods within the EU may remain subject to VAT in the Member State where the taxable person is established.
  • Special provisions will be introduced whereby online marketplaces and platforms facilitating supplies of goods are deemed for VAT purposes to have received and supplied the goods themselves – known as the “deemed supplier”.
  • New record keeping requirements will be introduced for online marketplaces and platforms facilitating supplies of goods and services, including where such online marketplaces or platforms are not a deemed supplier.
  • A new special scheme for distance sales of low value goods imported from third territories or third countries will be created – known as the Import One Stop Shop (IOSS).
  • The VAT exemption at importation of small consignments of a value up to €22 will be removed. This means all goods imported in the EU will now be subject to VAT, but simplification measures for distance sales of imported goods in consignments not exceeding €150 will be introduced, in cases where the IOSS is not used for imports.

Who will be affected?

The EU tax authority says everyone in the e-commerce supply chain will be affected by the new rules. This includes online sellers and e-commerce marketplaces both inside and outside the EU, as well as postal operators, couriers, customs and tax authorities, and even consumers.

What are the benefits of the new system?

The EU says the reforms alone could save businesses up to 95 per cent, or up to €2.3 billion (£1.9 billion) a year, in compliance costs.

Where can I learn more about the new rules?

The official EU guide can be found here. HM Revenue & Customs (HMRC) has also published guidance on the new rules here.

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To learn how the new VAT e-commerce rules will impact your operations, please get in touch with us.

New advice on EU imports customs declarations

New Government advice will help traders submit customs import declarations for non-controlled goods imported from the EU, it has been announced.

The report comes after HM Revenue & Customs (HMRC) wrote to more than 200,000 businesses reminding them of their new tax and customs obligations now that the UK has officially left the EU.

According to the guidance, businesses who have or will import goods during 2021 have two choices when making import declarations: make a full declaration as the goods arrive into Great Britain, or delay their declarations.

Where businesses choose to delay declarations, they must keep an accurate record of what they are importing – such as the date and time of the import, a detailed written description of the goods imported, and the commodity code(s).

A supplementary declaration should then be sent to HMRC within 175 days of the date the goods arrived in Great Britain.

Commenting on the new guidance, Katherine Green and Sophie Dean, Directors General, Borders and Trade, HMRC, said: “We know how hard businesses are working to adapt to the new rules and we want to do everything we can to help and support them to get things right.

“By offering the option to delay import declarations, we are giving businesses more time to prepare in what has been a challenging time for many.”

The guidance comes after the launch of the SME Brexit Support Fund, which offers grants of up to £2,000 to help businesses pay for specialist advice on the new importing and exporting processes.

The cash can be used to source professional advice so your business can “meet its customs, excise, import VAT or safety and security declaration requirements” – meaning the grant could be used to offset some of your accounting costs.

Ms Green added: “There is plenty of support available, with online guidance and the new SME Brexit Support Fund now open, offering grants of up to £2,000 to pay for training or professional advice on adjusting to new customs, rules of origin and VAT rules.”

If you have questions about the new trade rules or need assistance with any tax, VAT or related customs requirements, please speak to our experienced team today.

What are Freeports and how do they help businesses?

Eight new Freeports will create hubs for trade and help “regenerate” communities across Britain, the Queen’s Speech 2021 has confirmed.

But what are Freeports? And how could they help your business?

In this blog, we’ve covered everything you need to know about Freeports.

What are Freeports?

Freeports are trading hubs usually built around shipping ports or airports. Goods brought into freeports will not attract tariffs until they leave the freeport and enter the domestic market, while no duty is payable if they are re-exported. Manufacturers located inside free trade zones may also be exempt from filling out certain customs declarations or levies.

Freeports may also benefit from a range of other reliefs, including business rates relief, capital allowances, research & development tax credits, VAT and excise duty relief, Stamp Duty Land Tax relief, and Employer National Insurance Contributions relief.

Where will the eight new Freeports be located?

As confirmed in the Chancellor’s March Budget, the new Freeports will be located in the following regions:

  • East Midlands Airport
  • Felixstowe and Harwich
  • Humber region
  • Liverpool City Region
  • Plymouth
  • Solent
  • Thames
  • Teesside

What are the benefits of a Freeport?

As they benefit from a range of tax incentives, Freeports may attract new and established businesses and create new jobs and regenerate deprived areas.

Are Freeports banned under EU legislation?

Freeports can be established under European legislation, but the UK has not used the scheme since 2012, when the last British Freeport was closed.

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For help and advice on related matters, please get in touch with our expert Brexit advisory and international trade team today.

How will Brexit affect your overseas property, pensions and investments?

Since leaving the European Union in December last year, much of the focus has been on how it will affect your business. But what about your personal assets?

In this blog, we will look at the key changes affecting property, investments and other personal assets based in the EU.

Your State Pension (if you moved to the EU before or by 31 December 2020)

If you were living in an EU country by 31 December 2020, you are covered by the EU Withdrawal Agreement. This means that you will continue to receive your State Pension and it will increase in line with rates in the UK. Private pensions should continue to be paid interrupted.

Your State Pension (if you move to the EU after 31 December 2020)

You can carry on receiving your UK State Pension if you move to live in the EU, EEA or Switzerland and you can still claim your UK State Pension from these countries. It will also be increased each year in the EU in line with the rate paid in the UK. Private pensions should continue to be paid interrupted.

Will and estate planning

Don’t panic – your existing Will continues to cover all of your overseas assets, even after Brexit. But creating multiple Wills could speed up the time it takes for those assets, such as property and investments, to be released after your death.

This is because your existing English Will may need to be translated and notarised in the foreign jurisdiction your assets belong to.

EU succession regulation

The EU succession regulation was introduced in 2015 to make it easier to administer estates across the single market. Simply, the regulation provides that where EU citizens have assets in two or more countries, a single law of succession will apply to their estate on death – usually the law of the state in which the deceased was habitually resident at the time of death.

However, the landowner can choose the law of the state of their nationality instead. This can be used to side step forced heirship rules in countries such as France.

Inheritance Tax

As a UK-domiciled individual, Inheritance Tax will apply to your worldwide estate. Non-UK domiciled individuals, however, will only be taxed on the part of the estate that is based in the UK.

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For help and advice on any related matters, please get in touch with our expert Brexit advisory team today.

Watch now: new videos to help your business trade with the EU

The Government has launched a series of short, informational videos designed to help your business move goods between the UK and the EU and the rest of the world.

Here’s where to find them, and how they might assist you.

Exporting goods outside the UK

Useful for:

  • Selling products overseas
  • Staying compliant with international trading rules
  • Registering for an EORI number

Importing goods into the UK

Useful for:

  • The process of bringing goods into the UK
  • Staying compliant with UK trading rules, such as tax, VAT and customs processes

The customs clearance process

Useful for:

  • Businesses bringing special or prohibited goods in or out of the UK
  • Filling out customs forms
  • Hiring customs agents

Commodity codes

Useful for:

  • Understanding commodity codes and how they are used
  • Compliance with EU and rest of world trading rules

Controlled goods

Useful for:

  • Businesses trading in tobacco, alcohol, fishery products, firearms and other controlled goods
  • How to pay additional taxes and duties

Get expert advice today

For help and advice on any related matters, please get in touch with our expert Brexit advisory team today.