VAT – Trade between Ireland and Great Britain

Updated on April 9, 2022

Overview

The United Kingdom (GB) has ceased to be a member of the European Union (EU). A third-country country’s laws govern trading relations between Britain and that third country.

Note

VAT on goods in Northern Ireland (NI) is treated as though NI is still a member state of the European Union. When it comes to VAT on services, Northern Ireland is not considered a member state.

Detailed information on taxes and commerce with Northern Ireland can be found in the sections above.

Importing from Great Britain

For VAT purposes, imports are products that have arrived in the EU VAT region and are therefore subject to VAT. Northern Ireland is included in the EU VAT region, although the United Kingdom is not (GB).

VAT on import

In most cases, VAT is charged at the point of importation into Ireland or the Northern Ireland province of Northern Ireland. Although VAT will not be charged at this time if you are permitted to use the deferred payment scheme. Certain import charges can be delayed using the deferred payment mechanism. In addition to Customs Duty, there is also Value Added Tax (VAT). It is possible to delay the payment of these fees until the 15th of the month following the date of arrival of the goods. Those imported items that are sold in Ireland are subject to VAT at the same rate as if they were sold in Ireland.

Note

Postponed accounting is available to all registered VAT and Customs and Excise (C and E) taxpayers at 11:59 p.m. on 31 December 2020. You must provide specific codes on your import declarations in order to use postponed accounting. In Payment of Import Duties for UK Imports, you will find additional information.

As a result, if you import products from beyond the European Union’s VAT region, you must pay VAT on those goods. Transport, insurance, and any customs duties are all included. Guide to Import Procedures contains more information on VAT calculations.

Using a customs import declaration, you’ll need to notify Revenue of each shipment you want to bring into the country. In order to use Revenue’s Automated Import System, you must submit your declaration online (AIS).

For VAT-registered businesses, the VAT paid on products imported for business purposes is often deductible. Unless otherwise stated, you must claim this credit on your tax return for the taxable VAT period in which it occurred.

Certain products imported by a VAT-registered trader are exempt from VAT. If a VAT-registered trader imports products and does not charge import VAT, for example:

is located in a customs-free zone, such as an airport or port, or is exempt from paying VAT.

Distance selling

It is rather typical for companies in the UK to offer their products directly to individuals in Ireland. Due to the distance selling threshold, many GB-based enterprises are registered in Ireland and are obligated to charge Irish VAT.

These are the firms:

are required to register and pay Irish VAT on their sales to Irish clients and must submit the proper import declarations for products imported into Ireland.

Postponed accounting

All VAT-registered businesses are now eligible for postponed accounting for VAT on imports.

Traders who do not meet specific qualifications may be barred from participating in this programme by the Revenue Commissioners.

This is how it works:

Import VAT from non-EU countries can be postponed and reclaimed at the same time as VAT that is disclosed in a VAT return is accounted for. The regular rules for tax deductions apply here.
Trades that do not meet specific requirements may not be eligible for postponed accounting. Compliance with tax and customs law is one of the prerequisites and requirements that must be met. Revenue may also demand a company to demonstrate that its activities are viable and that it has the financial wherewithal to meet its VAT obligations.

How to use postponed accounting

One must provide a code on the import declaration in order to make use of postponed accounting. The importer can use this code to account for the VAT on import responsibility in their VAT Return. New boxes (fields) will be included in the VAT Return to record this data. To avoid paying VAT on imported goods, don’t enter that code in the first place. Postponed accounting has more information on how to put the plan to use.

Note

Postponed accounting is available to all registered VAT and Customs and Excise (C and E) taxpayers at 11:59 p.m. on 31 December 2020. You must provide specific codes on your import declarations in order to use postponed accounting. In Payment of Import Duties for UK Imports, you will find additional information.

On import declarations, the postponed accounting code should be omitted when a merchant has been exempted by Revenue from the plan. If this is the case, import VAT must be reported and paid. Importers who have been barred from participating in the programme will be prevented from doing so by customs officials.

Note

Purchases made in Northern Ireland are exempt from delayed accounting. Purchases made within the EU will be considered the same way they are now: as EU intra-community purchases.

Postponed accounting will necessitate additional inputs in the VAT Return and Annual Return of Trading Details (VAT RTD). Starting on January 1, 2021, the revised VAT Return and the VAT RTD will be required for all VAT periods or accounting periods.

Reclaiming VAT incurred in Great Britain

VAT paid in one EU member state can be reclaimed in another EU member state under European legislation. Establishment in that Member State is not required. The Electronic VAT Refund (EVR) system is used for this purpose.

The Electronic VAT Refund (EVR) System is no longer accessible:

VAT paid by Irish businesses in the United Kingdom (UK) or VAT paid by UK businesses in Ireland.
You may be eligible for a VAT refund if you paid VAT in the United Kingdom. Direct communication with Her Majesty’s Revenue & Customs is required for this request (HMRC)

Note

VAT paid on products purchased in Northern Ireland can be reclaimed using the EVR system. The VAT Directive has been updated in order to make this possible. According to the legislation, businesses in Northern Ireland should use an other VAT number when transacting with the EU on goods. NI trader’s VAT number should have the prefix ‘XI’ in these transactions. According to the Protocol on Northern Ireland/Ireland, this is the case.

Exporting to Great Britain

Exports are items that are shipped directly to a location outside of the EU’s VAT zone for the purposes of Value Added Tax (VAT). Great Britain is now included in this.

Businesses in Ireland can no longer use the distance selling threshold to sell to customers in Great Britain.

Exports are subject to a zero-rate of VAT. VAT and Exports has further information.

You must have proof that the products have been exported from the European Union.

A customs export declaration must be used to notify Revenue of each shipment. Automated Entry Processing (AEP) System is used to submit the declaration electronically.

Certain sorts of EU exports necessitate licences. It’s possible that Revenue will ask for proof that you have a licence to export products.