For transactions involving Northern Ireland (NI), a temporary protocol applies on the basis of the Withdrawal Agreement between the UK and the EU. This arrangement will enter into force on 1 January 2021. The Protocol will be in force for at least four years from 1 January 2021, subject to periodic review.
The UK tax authority HMRC is responsible for the administration and collection of EU VAT and excise duties in NI. In short, the scheme means that NI is remaining in the EU with regard to the levying of VAT. To report transactions between NI and Irish or other EU companies, the EU will issue VAT identification numbers to NI companies.
To enable reporting by NI companies on their transactions with Irish or other EU based companies, the European Commission (EC) has introduced a special VAT identification number. This will make it easier for NI and EU companies to correctly classify transactions between each other according to EU VAT rules. This includes VAT exempt or zero rate B2B deliveries, as well as B2C sales based on distance selling or digital MOSS services. NI companies will also need to provide counterparties with a valid EU identification number to view the VIES system.
After December 31, 2020, the prefix ‘GB’ VAT number will not be sufficient because the UK has left the EU VAT system. The EU will issue businesses in the UK and NI with an EU VAT identification number – an area code ‘XI’ on their UK VAT number – so that they can report goods transactions after December 31, 2020. They will also be given a ‘XU’ country code for UK excluding NI (Great Britain or GB).
Cross-border services between NI, GB and EU are not part of the dual arrangement of the NI protocol. Services between NI and EU are treated like all other transactions between the EU and a third country.
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