BREXIT: EU & GB Deliveries to and from Northern Ireland

Deliveries to and from Northern Ireland after BREXIT

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.

VAT identification number EU Northern Ireland XI and XU

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).

The following situations apply to trading with Northern Ireland based on the new protocol:

  • B2B goods movements from NI to EU: These are intra-Community supplies just like before. For the EC Sales Listing, NI companies can use the new XI country code prefix for trade with the EU. For NI trading with GB, NI companies can use the XU country code with their GB VAT number. Goods moved between the EU and NI-based operators will continue to be treated as intra-Community transactions.
  • B2C Sales of goods from NI to EU: B2C sales between NI to Ireland are still subject to distance selling rules. Note that this will change under the EU e-commerce package on July 1, 2021 when the distance selling thresholds are removed. Instead, NI sellers to Irish (or another EU consumer) can use one VAT return (One-Stop-Shop, OSS)
  • B2B deliveries from NI to GB: All B2B goods shipped between NI and GB are treated as exports and imports for VAT purposes. In broad terms, this means that import taxes – customs duties, VAT and excise duties – are due. HOWEVER: The UK VAT on NI to the UK VAT interpretation is a variation on this. It has chosen to treat GB vs NI as a domestic transaction.
  • B2C Sale of Goods from GB to NI: If the recipient is a resident of NI, UK VAT is due and must be charged by the GB seller. However, if the goods are shipped to an address in Ireland and sent via NI, they are an import.

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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