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tariffs apply on goods remaining within the United Kingdom’s the distance selling threshold of Spain (€35,000) in 2020 with
customs territory. shipments from Northern Ireland, they will still have to apply
Spanish VAT on similar sales in 2021.
Only goods with no UK preferential origin ultimately entering
the Republic of Ireland or the rest of the European Union, or at From 1 July 2021, consumer distance sales between the EU and
substantial risk of doing so, should be subject to customs tariffs Northern Ireland will be subject to the new EU VAT reform on
when reaching the border of Northern Ireland by sea/air. distance sales, which will remove the distance selling threshold
and allow the reporting and pay of VAT in all the EU via the
Health and safety controls may take place in Northern Ireland, One-Stop-Shop electronic interface. Quite a simplification.
for instance, on UK products such as meat and eggs, as the
remaining part of the United Kingdom is no longer subject to Trade to Northern Ireland from outside the EU
EU rules. As in all the other parts of the United Kingdom, there is
no longer Low-Value Consignment Relief (LVCR) for
VAT will continue to be accounted for as it was prior to 2021 consignments of goods valued at £15 or less. So, import VAT
on goods sold between Great Britain and Northern Ireland. This applies to all shipments from outside the EU to Northern
means that the seller will continue to charge its customers VAT Ireland.
and should show this on sales invoices.
However, there are simplifications. Postponed VAT accounting
However, there are a small number of exceptions to this system. will be available to VAT-registered traders when they release
For instance, when goods are declared into a special customs imported goods of any value for home consumption, allowing
procedure while entering Northern Ireland or Great Britain, import VAT to be declared on their VAT return.
(in this case, the business customer or importer will be liable to
account for VAT), or are subject to an Onward Supply procedure For imports of overseas goods (outside of the EU at point of
(this means that the products are destined directly to the EU) or sale) into Northern Ireland in shipments that do not exceed £135
are sold by an overseas seller through an online marketplace (in in value (threshold to be determined under the FOB criteria),
the latter case, the marketplace is liable to collect and pay VAT the liability for import VAT will be on the seller or on the online
on the sale in lieu of the seller). marketplace for business-to-consumer transactions. It is the
same system applied to the remaining parts of the UK, which we
Trade between the EU and Northern Ireland (and vice analysed in the previous issue of Cross-Border Magazine.
versa)
Even after Brexit, the trade of goods between VAT-registered Imports of consignment with a value higher than £135 from
businesses in the EU and Northern Ireland must still be outside the EU may also be subject to tariffs unless a Free Trade
zero-rated as long as the acquirer holds a valid VAT number Agreement or other cause of exemption applies.
recorded in the EU VIES database and all the other statutory
requirements are met. The future
The Northern Ireland Protocol allows the Northern Ireland
VAT-registered businesses trading in Northern Ireland must use Assembly to express its consent (or not) on the current
a VAT number starting with the XI prefix. This VAT number will arrangements by the end of 2024. According to the NI Protocol,
be used by EU businesses to zero-rate their intra-EU sales to if the consent motion is passed by cross-community support
businesses in Northern-Ireland (and the other way around). (meaning by a majority of both Unionists and Republicans), then
a further consent decision is required within only eight years.
Intrastat requirements between the EU and Northern Ireland are However, if the consent motion is passed by a simple majority, a
still in place even after January 2021. further consent decision is required within four years.

With respect to consumer distance sales, the current EU VAT On the contrary, if the Assembly of Northern Ireland resolves
system based on distance selling thresholds will still apply to not to pass the consent resolution, then Northern Ireland’s
consumer sales from the EU to Northern Ireland and in the aligning with EU law will come to an end within a two-year
opposite direction. So, EU sellers will still use their UK VAT period. In this case, A UK-EU Joint Committee, established
number to report distance sales to Northern Ireland (those under the Withdrawal Agreement, will make recommendations
where the postcode starts with BT) if they met the £70,000 to the UK and the EU on a new arrangement concerning
threshold in 2020 or have opted for the application of VAT Northern Ireland. ••
at the destination. Similarly, if a Northern Irish business met

Alan Rhode is a co-founder at Taxmen, the one-stop-shop for legal and tax services to the e-commerce industry.

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