VAT – Trade between Ireland and Great Britain

Updated on April 12, 2022

Overview

The United Kingdom (GB) is no longer a member of the European Union (EU). A third-country country’s regulations govern trading relations with Britain.

Note

With regard to VAT on products, Northern Ireland (NI) remains an EU Member State. When it comes to VAT on services, Northern Ireland is not considered a Member State.

VAT and commerce with Northern Ireland have more information.

Importing from Great Britain

Goods coming in the European Union’s Value Added Tax (VAT) zone are considered imports for VAT purposes. However, Great Britain is not included in the EU VAT zone (GB).

VAT on import

VAT is normally paid by importers in Ireland and Northern Ireland at the time of importation. People who are eligible for deferred payment are exempt from this restriction. Certain import charges can be postponed by utilising the deferred payment technique. Customs duties and VAT are included in the import fees (VAT). Payment of these expenses may be postponed for up to 15 days following importation. The same VAT rate is applied to imported goods as to those sold in Ireland.

Note

Postponed Accounting will be available to all VAT and Customs and Excise (C and E) registered businesses on December 31, 2020, at 11:59 p.m. Import declarations must include specific codes in order to take advantage of postponed accounting. That document contains information on the payment of import duties for products imported into the UK.

As a result, products imported from beyond the European Union’s VAT territory are subject to VAT. The cost of shipping, insurance, and any customs fees is included in this pricing. There is further information on VAT calculations in the Import Procedures Guidebook.

Customs import declarations must be used to notify Revenue of any and all products. It is Revenue’s automated import system that is used for electronic declaration submissions (AIS).

VAT paid on commercially imported items may be deductible for VAT-registered businesses. Due dates and conditions apply to this credit in your VAT return, so make sure you follow them.

Importing VAT-exempt items is possible for VAT-registered traders. VAT-registered businesses are exempt from paying import VAT on purchases.

Tax-free or duty-free status provided at an airport or port.

Distance selling

Selling products over the internet
Businesses in Great Britain frequently sell their products to customers in Ireland via the internet. A number of British-based enterprises are registered in Ireland and must charge Irish VAT because they have exceeded the distance-selling threshold.

These are the firms:

are required to register and pay Irish VAT on their sales to Irish clients and should complete the proper import paperwork.

Postponed accounting

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

The Revenue Commissioners have the authority to deny access to this programme to businesses who do not meet specified criteria.

This is the plan:

import VAT from non-EU countries can be postponed so that you can account for it on your VAT return and recover it at the same time as you disclose it in your return. Normal rules of deductibility apply here.
Businesses that do not meet certain qualifications or procedures may be excluded from postponed accounting by Revenue Commissioners. Compliance with tax and customs laws is among the conditions and requirements that must be met. Businesses may also be asked by Revenue to demonstrate their ability to meet their VAT obligations.

How to use postponed accounting

To use postponed accounting, one must give a code on the import declaration. Allows the importer to submit a VAT return to show their tax liability. New boxes will be added to the VAT return to include this data (fields). If an importer wants to use VAT, they don’t need to submit a specific code in the form. Instructions for using the system can be found in the section titled “Postponed accounting”.

Note

On December 31, 2020, at 11:59 p.m., everyone registered for VAT and Customs and Excise (C and E) can use Postponed Accounting. To make use of postponed accounting, your import declarations must contain particular codes. Information about the payment of import duties for goods imported into the United Kingdom can be found in that document.

If Revenue has expelled a merchant from the postponed accounting system, the code should not be supplied on the import declaration. This necessitates the payment of import VAT. For those who have been barred, customs authorities will keep them out of this scheme.

Note

Purchasing goods in Northern Ireland is free from the Postponed Accounting provision. Therefore, these acquisitions have already been assigned the designation of being made within the European Union (EU).

Postponed accounting will be included in VAT reports and the Annual Return of Trading Details (RTD VAT). On January 1, 2021, the new VAT returns and RTD will be in effect for all VAT periods and accounting periods.

Reclaiming VAT incurred in Great Britain

You can reclaim VAT incurred in another EU Member State from that Member State under European legislation. That Member State does not necessitate your presence there. The Electronic VAT Refund (EVR) system is used for this purpose.

Refunds under the EVR System are no longer accessible.

VAT paid by Irish businesses in the United Kingdom (UK) or VAT paid by UK businesses in Ireland.
If you have been charged VAT in Great Britain, you may be entitled to a refund. HM Revenue and Customs must be contacted directly for this request (HMRC)

Note

Use the EVR system in Northern Ireland to reclaim VAT spent on goods. 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. These transactions necessitate the inclusion of the prefix “XI” in the NI trader’s VAT number. According to the Protocol on Ireland/Northern Ireland, this is the correct approach.

Exporting to Great Britain

For VAT purposes, exports are products that have been shipped outside of the European Union VAT region and are therefore exempt from VAT. Britain has now been added to this list.

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

Exports are exempt from paying VAT. VAT and Exports has further information.

Export documentation is required, as is verification that the products in question have left the European Economic Area (EEA).

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

Certain types of EU exports necessitate export licences in order to be legal. A licence for exporting products may be required by Revenue.