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How is Paddle affected by Brexit?

On 1 January 2021, the UK left the European Union.

We have been doing plenty of work behind the scenes to ensure we’re fully prepared. So here’s some more information on what the impact is for your business, your buyers, and Paddle.

How does Brexit affect your relationship with Paddle?

Contract / reseller agreement: No impact on your contract with Paddle as contracts are national rather than supranational. Your contract with Paddle is and will remain governed by English Law. Currently, the Rome I and II EU Regulations give contract parties freedom to choose the law that will govern their contractual obligations (this does not have to be the law of an EU Member State). Post-Brexit, the EU courts remain subject to the EU Regulations and will therefore be obliged to respect the parties’ choice of governing law (including choice of English law).

Supplies of software: No impact on sale of software to Paddle and resale to end customers. Under WTO rules, supplies of software fall under the General Agreement in Trade Services (GATS), which means international sales are tariff-free. See this MMC paper on the impact on Brexit on UK tech.

GDPR: The EU-UK Trade and Cooperation Agreement contains a bridging mechanism that allows the continued free flow of personal data from the EU/EEA to the UK after the transition period until adequacy decisions come into effect, for up to 6 months. EU adequacy decisions for the UK would allow for the ongoing free flow of data from the EEA to the UK. We are reviewing our internal policies and processes and putting in place alternative transfer mechanisms (including the use of Standard Contractual Clauses) to ensure continued compliance.

VAT: As Merchant of Record, Paddle takes on responsibility of charging VAT to end customers. Although Paddle’s filing requirements have changed, this has no effect on you as a Seller with Paddle. Your sales to Paddle will continue to be treated as cross-border supplies with no VAT applied. B2C customers will continue to be charged VAT in the EU and the UK (and the other jurisdictions that Paddle covers). See this guidance from the UK Government.

In summary, you will not notice any difference in trading following Brexit.

If you have any other questions, get in touch with our team.

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