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 Sale of goods to the EU (from GB only).
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 for VAT periods that cover transactions on or after 1 January 2021, 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
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 here. 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.
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 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.|
B.Your total annual distance sales to EU countries have exceeded EUR 10,000
|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. On your distance sales, you would enter VAT of the EU country of the customer, rather than UK VAT. UK VAT should not be entered on the sales transaction, however the net value of the sale is required in Box 8. of the UK VAT return (as well as Box 6.), according to 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.|
|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 there.|