VAT implications of cross-border trade of goods

The Northern Ireland Protocol provides that Northern Ireland will be subject to the same EU VAT rules on goods as EU Member States. In this article we summarise the VAT implications of cross-border trade of goods.

Contents

Introduction

Whilst Northern Ireland maintains alignment with the EU VAT rules for goods it will remain part of the UK’s VAT system. HMRC will continue to be responsible for the operation of VAT and collection of revenues in Northern Ireland.

It is essential that traders understand and apply the relevant VAT rules correctly.

Trade between Ireland and Northern Ireland

The Northern Ireland Protocol applies to supplies of goods between Northern Ireland and Ireland.

The established treatment of the supply of goods, as well as the intra-community supply and acquisition of goods rules, apply when moving goods from Northern Ireland to Ireland (and vice versa). This is in respect of Business to Business sales.

(Different rules apply to B2C distance sale of goods from Northern Ireland to the EU, the B2C distance sale of goods between EU member states and the importation of low value goods into the EU or Northern Ireland.)

Northern Ireland businesses continue to be required to complete EC Sales Lists when selling goods to VAT registered customers in the EU and Intrastat declarations (which are subject to the Intrastat thresholds for dispatches and arrivals).

Irish businesses moving and supplying goods to Northern Ireland are required to report details of trade with Northern Ireland on Intrastat returns (subject to the threshold limits) and VAT Information Exchange System (VIES) returns. The Irish Revenue Commissioners have provided further information on the completion of VIES and Intrastat returns.

There is a requirement to put an XI prefix in front of your VAT number on your invoices if moving goods from NI to EU, and to provide your XI prefix in front of your VAT number when communicating with suppliers moving goods from EU to NI.

Trade between Northern Ireland and GB

The Northern Ireland Protocol means that Northern Ireland maintains alignment with the EU VAT rules for goods, including on goods moving to, from and within Northern Ireland. However, Northern Ireland is, and will remain, part of the UK’s VAT system.

Although import VAT applies to goods that enter Northern Ireland from GB, flexibilities within the EU VAT rules have been used to ensure that VAT processes for goods moving to NI remain as unchanged as possible. As such, when purchasing goods from GB, NI traders should typically expect to see UK VAT charged on the invoice. This will also be the case when GB businesses purchase goods from NI.

Trade between Ireland and GB

The movement of goods between Ireland and GB is treated as export and import for VAT purposes.

Both the UK and Ireland have introduced Postponed VAT accounting in respect of imports into the UK/EU from 1 January 2021 for businesses that are VAT registered in the UK/EU. This is aimed at alleviating the cashflow challenges that can be created by accounting for import VAT. We have a detailed article all about the use of Postponed VAT accounting.

From 1 January 2022 this is no longer a requirement. It is also no longer necessary to submit Intrastat declarations in respect of goods which are exported from GB to the EU, as is outlined in HMRC Notice 60: Intrastat general guide.

Where EU traders trade with GB businesses the rules of trade with a non-EU country will apply. Therefore, supplies and movement of taxable goods between Ireland and GB will be subject to the VAT rules on exports and imports. Intra-EU rules and simplifications, such as triangulation, will no longer apply to sales between GB and the EU.

Post-Brexit, businesses based in Ireland may be required to register for VAT in GB as outlined in the Irish Revenue’s guidance on the VAT implications of trade with GB. From 1 January 2021, you will need an EORI number to move goods between Ireland/EU and GB.

For GB businesses, you’ll need an EU EORI number if your business will be making declarations or getting a customs decision in the EU. You can get this from the customs authority in the EU country where you submit your first declaration or request your first decision. HMRC have provided guidance on getting an EORI number.

Trade between Ireland / Northern Ireland and rest of the world (non-EU)

The movement of goods between Northern Ireland / Ireland and the rest of the world is treated as exports and imports for VAT purposes. Post-Brexit, Great Britain is included as the rest of the world for VAT purposes.

From 1 January 2021, Northern Ireland traders will need an EORI number that starts with XI to export goods from Northern Ireland to rest of world and in order to import goods into Northern Ireland from rest of world. Northern Ireland businesses will be issued with a unique Northern Ireland EORI starting with XI.

Irish businesses will continue to require an EORI number commencing with IE in order to import goods into or export goods out of the European Union. Post-Brexit, this includes the exportation to or importation from Great Britain (not Northern Ireland).

Registering for UK VAT

It is acknowledged that some businesses may be required to register for UK VAT that were not previously required to register. Businesses may be required to register for UK VAT for the following reasons:

• Goods sold between GB and Northern Ireland.
• Goods sold from GB, transported via Northern Ireland, to an EU member state (if goods are located in GB at the point of sale).
• Businesses moving their own goods from GB to Northern Ireland (Note: a business will not be required to account for VAT on the movement of own goods from Northern Ireland to GB unless the goods are subject to an onward sale to its customer in GB).
• Sales of goods from GB to Northern Ireland, and within Northern Ireland, by members of a UK VAT group.
• Importation of goods from EU/Rest of World to GB with subsequent supply of goods in the UK.

Exceptions to these rules will apply in scenarios whereby the customer / importer will account for VAT in its UK VAT return. These include movements of goods between GB and Northern Ireland declared into a special customs procedure, supplies subject to domestic reverse charge rules, or supplies subject to onward supply procedures.

Where goods are sold between members of a UK VAT group, and those goods move from GB to Northern Ireland, VAT should be accounted for in the same way as a movement of own goods. In order for domestic supplies of goods in Northern Ireland to be disregarded for VAT purposes when sold between members of a VAT group, both entities must be established, or have a fixed establishment in Northern Ireland. Where these conditions are not satisfied, VAT must be accounted for on the supply.

Further information

Revenue.ie: VIES and Intrastat information: What are VIES and Intrastat?

Revenue.ie: Postponed VAT accounting

Revenue.ie: VAT implications of trade with Great Britain

GOV.UK EC Sales List information: Report goods sold from Northern Ireland to VAT-registered EU businesses

GOV.UK Intrastat information: Trading goods with the EU: when to declare using Intrastat

GOV.UK HMRC Notice 60: Intrastat general guide

GOV.UK Get an EORI number: Who needs an EORI.

Article reviewed: April 2023