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Sale of goods to the EU from Northern Ireland

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Introduction

The information on this page is for general guidance only and should not be taken as definitive VAT advice, since individual circumstances may vary. You should refer to HMRC guidance for details of your obligations for sales of goods from Northern Ireland (NI) to the EU.

The guidance below is for NI businesses only and does not apply to businesses trading in Great Britain (GB), i.e. the United Kingdom excluding Northern Ireland, after 31 December 2020. For GB businesses please refer to Sales of goods to outside the UK.

Summary

Under the Northern Ireland protocol, Northern Ireland will be part of the UK VAT system whilst also maintaining alignment with EU VAT rules for movement of goods* (not services). The protocol will be in place for at least 4 years from 1 January 2021.

This means that sales of goods from NI to the EU (including the Republic of Ireland) will follow the same VAT treatment as existing rules for sales of goods between EU member states (referred to as 'dispatches'). Therefore businesses selling goods from NI to EU member states will generally be required to account for dispatches as follows:

zero-rate VAT on sales of goods to VAT registered businesses in an EU country, subject to certain conditions

charge UK VAT on sales to non-VAT registered businesses in an EU country (known as distance sales), but only if your total annual distance sales are less than EUR 10,000; otherwise VAT of those countries is due. You would therefore have to register for VAT in those countries, or register for VAT in a single EU country and pay VAT through the Union One Stop Shop OSS Scheme.

report the net value of the following sales in Box 8 of their UK VAT return (as well as Box 6):

osales of goods to VAT registered customers in EU countries

osales of goods to non-VAT registered customers in EU countries (distance sales), but only if total annual distance sales exceed EUR 10,000

complete an EC Sales List for sales to VAT registered businesses in EU countries

*Movement of goods between GB and NI may differ, see Sale of goods from GB to NI

Accounting for sales of goods from Northern Ireland to the EU in VT Transaction+

If the customer is VAT registered

If you have set up VAT cash accounting in VT Transaction+, this will not allow the following method to be used.

The sale is normally zero-rated for UK VAT subject to certain conditions. If the conditions are met for zero-rating, zero-rate VAT should be entered for the transaction in the same manner as described for exports in Sales of goods to outside the UK. Furthermore, the net value of the sale needs to be included in Box 8. (as well as Box. 6) of the VAT return, which is achieved by selecting the Sales of goods to the EU option when entering the sale:

REC - Receipt dialog (if customers ledger not used)

Tick the Sale of goods to the EU box at the bottom left of the dialog

 

Please note that this option is not available in the Payments and Receipts (P+R) dialog.

SIN - Sales invoice dialog

In the Type of sale (for VAT purposes) drop down list at the bottom of the dialog select the Sale of goods to the EU item

SIN - Sales invoice document dialog

In the Type of sale (for VAT purposes) drop down list at the top right of the dialog select the Sale of goods to the EU item

To enable this option you will need change the VAT status for your business by selecting Set Up>VAT and ticking the 'Business is situated in Northern Ireland or the EU' box.

The VAT return will display as follows:

VAT return element

Included in VAT return

Amounts included £

Net value of sale

Box 6

e.g. 100.00

Net value of sale

Box 8

e.g. 100.00

If the conditions for zero-rating of VAT are not met, UK VAT is due, and the sale is accounted for in the normal way for a UK sale as described in here.

If the customer is not VAT registered (distance sales):

A.Your total annual distance sales to EU countries have not exceeded EUR 10,000

UK VAT is normally charged at the appropriate rate, in which case VAT should be entered for the sales transaction in the same way as for a domestic sale, as described in here. The net value of the sale should not be included in Box. 8 of the VAT return, according to paragraph 6.17 of this HMRC guidance, so you should not select the Sales of goods to the EU option when entering the sale. The sale will be included in Box. 6 as normal.
The UK VAT return in VT Transaction+ will display as follows:

VAT return element

Included in VAT return

Amounts included £

Output VAT

Box 1

e.g. 20.00

Net value of sale

Box 6

e.g. 100.00

B.Your total annual distance sales to EU countries have exceeded EUR 10,000

If you have set up VAT cash accounting in VT Transaction+, this will not allow the following method to be used.
UK VAT is not due but VAT of the EU countries is due. You are required to either register for VAT in those countries or register for VAT in a single EU country and pay all EU VAT due using the Union One Stop Shop (OSS) Scheme. Please refer to VAT OSS Scheme for details of how to account for this in VT Transaction+.
This treatment also applies if your annual distance sales to EU countries are below the threshold of EUR 10,000 but you have voluntarily opted to register for VAT in an EU country.
Furthermore, the net value of the sale is required in Box 8. of your UK VAT return (as well as Box 6.), according to paragraph 6.17 of this HMRC guidance. Therefore you should select the Sales of goods to the EU option when entering the sale which will ensure it is included in Box. 8.
The UK VAT return in VT Transaction+ will display as follows:

VAT return element

Included in VAT return

Amounts included £

Net value of sale

Box 6

e.g. 100.00

Net value of sale

Box 8

e.g. 100.00