How to sell services to the EU after Brexit
Since Brexit took place on 31st December 2020, much attention has been paid to the movement of physical goods to and from the EU. However, it’s not just the rules for imports and exports that have changed – it’s how we trade intangible items, such as services, too.
If you are selling services to the EU, it is essential to be aware of the rules to continue providing to existing clients and generating new business. The UK-EU TCA granted the UK continued access to the EU market, although there are some limitations.
As with other trade areas, there has been some disruption to the provision of services, which was found to be down 8.8% from last year in February. That said, there may still be opportunities for providers who can export correctly and compliantly.
In this guide, we’ve explained what the new rules are for exporting services to EU countries so you can understand what your business needs to do.
As with physical imports and exports, there have been amendments to how UK businesses trade their services. Although you will not need to face border checks, you still need to ensure you are complying with the correct processes to continue carrying out business.
The exact requirements you need to fulfil when providing services will vary from country to country, so you must check the rules for the destination you are exporting to. Requirements could include obtaining a licence to trade in the country or having to meet specific nationality criteria. You can find complete guidance per country on the government website.
There may also be restrictions on whether you can own a business in that country, centred around nationality requirements for company boards and how much equity non-nationals can hold. As a result, some UK companies with their central administration in some EU member states may find that their limited liability is no longer recognised. If this affects you, you will need to seek professional advice specific to your sector about structuring your company to avoid ramifications and overcome the obstacles.
It may also be worth getting an English-speaking lawyer in the country that you are looking to sell services. This person will act as a translator and make any issues or requirements clear to you, which may prove helpful in the ongoing provision of services.
There has also been some change to how VAT is paid on service exports.
If you supply digital services to customers outside the UK, these won’t be liable to any UK VAT. However, they may require VAT in the country you are importing to, so you need to check this in advance. If you supply digital services to consumers via a third party (such as a digital platform or marketplace), the third party should take care of VAT instead of you.
If you need a VAT number in the EU for your services, you will need to be registered. Businesses have the choice of registering for VAT in every country they will be supply services for. You can use the Non-Union VAT MOSS scheme to register in all the EU member states relevant to your business.
When accounting for VAT after providing a service to another business, you will need their VAT registration number. If the service is going to a consumer, you will need to charge them VAT based on the rules for the country they live in (otherwise known as the ‘place of supply’).
If you are exporting to Northern Ireland, you need to follow standard UK VAT rules, as they continue to align to GB regulations on this point.
If the nature of the services you are supplying requires you to travel to the EU at any point, you need to be aware of the rules for travel and ensure you meet them to allow you into the country of destination.
The requirements for travel post-Brexit include having a valid passport with at least six months left on it, securing a visa or permit if intending to stay for more than 90 days and declaring any goods you might be bringing with you to sell.
You can find out the complete requirements in our dedicated business travel guide.
Recognition of professional qualifications
You will need valid professional qualifications to provide them in the EU for some services, such as in regulated industries. However, there have been some changes to how these qualifications are recognised after Brexit.
If you provide regulated services, such as finance, you must ensure your qualifications are by the appropriate regulator in the country you are carrying out the work. Previously recognised qualifications remain valid.
Under the UK-EU trade agreement, both sides can submit joint recommendations to the UK-EU Partnership Council for profession-specific arrangements. These arrangements could enable UK professionals to have their qualifications recognised in the EU (and EU professionals in the UK). However, these arrangements have not yet been approved, so you should follow government advice regarding your qualifications in the meantime.
Depending on the nature of your services and whether you handle customer data, GDPR rules will apply. There is currently a regular flow of data between the UK and EU, while an adequacy ruling is awaited from the EEA. However, this is set to end on 30th June 2021 at the latest. Once the verdict comes into effect, it could bring further GDPR changes.
As a precaution during this period, the government recommends you work with any organisations that transfer personal data to you and set up alternative transfer mechanisms in case the free flow of EU to UK personal data is interrupted later on.
Once adequacy decisions have been made, it will be clearer what businesses need to do to protect and share data. It is worth keeping up to date with news from the ICO so you know when any information is released.
If your business supplies services to the EU or intends to in the future, it is vital to understand the new processes and rules following Brexit. Doing so will enable you to continue to export services to your customers unimpeded.
If you need support in adjusting your operations to changed regulation, we can help. Our team of advisors have expertise across several key topics, including the trade of both services and goods. As such, we can take you through the requirements and find solutions for the specific challenges your business may be facing.
Our advice is also funded under the SME Brexit Support Fund which expires at the end of June 2021.