As of January 1, 2021, the United Kingdom will effectively leave the European Union.
As a reminder, the United Kingdom is a country made up of four nations: England, Scotland, Wales and Northern Ireland.
Since the Republic of Ireland will remain a member state of the European Union, this means that the hard border between the EU and the United Kingdom should in principle be the border between the Republic of Ireland and Northern Ireland.
However, a protocol has been put in place so that the EU border is in practice between Great Britain (consisting of England, Scotland and Wales) and Ireland (consisting of the Republic of Ireland and Northern Ireland).
Customs controls will be reinstated for goods moving between Great Britain and Northern Ireland.
On the other hand, goods will in principle be able to move freely between Northern Ireland and the Republic of Ireland. Goods will also be able to move freely between Northern Ireland and other EU member states.
Goods brought into Northern Ireland from Great Britain will in principle not be subject to customs duties, except where there is a risk that the goods are in fact destined for the EU. In this case, the goods will be subject to EU customs duties.
In order to avoid EU customs duties on entry into Northern Ireland from Great Britain, importers must prove that the goods will be sold or used in Northern Ireland and obtain an authorisation for the UK Trader Scheme.
To import goods into Northern Ireland you will need an EORI number starting with "XI".
To have an EORI XI number you must first have an EORI GB number.
If you already have an EORI GB number, you must apply for an EORI number that starts with XI if you have not already received one from HMRC by post.
If you don’t have an EORI GB number yet, you can apply for an EORI GB number and an EORI XI number at the same time.
BtoB sales of goods between Northern Ireland and the Republic of Ireland will continue to be subject to the intra-Community supply/acquisition rules. These sales will be able to be invoiced without VAT if the conditions for exemption are not met and if you have validly notified HMRC (see answer no. 6).
BtoC sales of goods between Northern Ireland and the Republic of Ireland will remain subject to the intra-Community distance selling rules. These sales will have to be invoiced with Irish VAT or British VAT, depending on whether the thresholds are exceeded or not (until the reform scheduled for 1 July 2021).
In application of the protocol, BtoB and BtoC sales of goods between Northern Ireland and Great Britain should in principle be subject to import/export rules. However, the United Kingdom has chosen to treat them as domestic sales within the UK. These sales will therefore in principle have to be invoiced with British VAT.
The movement of goods between Northern Ireland and countries outside the EU and Great Britain will be subject to import/export regimes with some particularities (see focus on BtoC sales from countries outside the EU and Great Britain below).
On the other hand, Northern Ireland will be considered as a third country to the EU for the application of the VAT rules concerning the supply of services.
As long as Northern Ireland remains within the UK VAT system, businesses that already have a UK VAT number will not need to register for VAT again. Taxable transactions in Great Britain and Northern Ireland will be reported on the same box of the UK VAT return.
However, if you are a VAT registered company in the UK, you must inform HMRC if you are in one of the following cases:
- your goods are located in Northern Ireland at the time of sale ;
- you are receiving goods in Northern Ireland from European companies;
- you are selling or moving goods from Northern Ireland to an EU Member State.
In addition, invoices for transactions in Northern Ireland will need to show the prefix "XI" rather than the prefix "GB" on your UK VAT number to distinguish them from transactions in the UK.
Importing goods into Northern Ireland from outside the EU and the UK will normally give rise to the payment of import VAT to Customs. However, it will be possible to benefit from the reverse charge of import VAT on the UK VAT return.
I am making BtoC sales of goods shipped to Northern Ireland from outside the EU and Great Britain via my website, what will happen to me?
The applicable treatment will depend on the value of the package:
- If the value of the package is less than or equal to £135, you will be required to charge UK VAT on the first sale. Therefore, you will be required to have a UK VAT number from January 1st 2021.
- If the value of the package is more than 135 GBP, you will not have to charge VAT. However, VAT on import into Northern Ireland will be charged by the carrier to your customer prior to delivery of the package, which could result in a large number of package refusals. Indeed, British private individuals are used to buying inclusive of VAT, and there is a good chance that they will refuse to pay an extra charge on delivery. Therefore we strongly recommend that you take care of the import in Northern Ireland (see last question).
The threshold of 135 GBP corresponds to the price excluding VAT charged to your customer for all the products in the same package.
This price excluding VAT is exclusive of insurance and transport costs, provided that these are invoiced separately and not included in the sale price of the products.
For my parcels with a value of more than 135 GBP, I want to be able to invoice my customers in Northern Ireland with the British VAT from the moment of the order in order to avoid the refusal of parcels, how can I do this?
You will need to act as an importer in Northern Ireland. These sales will then constitute for you :
- In the country of departure, exports HT ;
- In Northern Ireland, taxable imports followed by taxable domestic sales.
You will then be able to charge UK VAT at the time of the order, and no extra charge will be made to your customer at the time of delivery.
In order to act as an importer, you will need to appoint a UK indirect customs representative and have him/her carry out the import formalities on your behalf. You will be required to pay the VAT on import into Northern Ireland (which is then recoverable) unless you opt for the reverse charge option.
In any case, you will need to have an EORI XI number and a UK VAT number in order to import and invoice UK VAT.
I am making BtoC sales of goods shipped to Northern Ireland from outside the EU and the UK via a Marketplace, what will happen to me?
Marketplaces will become liable for UK VAT on your behalf.
This means that you will have to invoice your client without VAT. This is because UK VAT will be charged to the customer by the Marketplace itself.