Ecommerce VAT changes in Northern Ireland
Brexit and the Northern Ireland protocol have caused a lot of confusion for businesses in Northern Ireland, and things are getting even more complicated by the day. In this blog post we are going to attempt to distil some recent changes published by HM revenue & customs related to VAT on distance sales of goods between NI and the EU.
The EU VAT ecommerce package took effect on 1 July 2021. It results in changes to the Business to Consumer (B2C) sale of goods between Northern Ireland and the European Union (EU), and the import of 'low value' B2C goods into the EU or Northern Ireland from outside the EU.
The EU’s ecommerce package introduces changes from 1 July 2021 covering the movement of goods from Northern Ireland to the EU and imports of low value goods (i.e. not exceeding £135) into the EU or Northern Ireland.
The package also introduces new rules for supplies made through online market places, similar to those already applying in Great Britain and partly in Northern Ireland.
Two new IT systems will also be introduced – one for the collection of VAT on imports of low value consignments and the other for the collection of VAT on intra-EU Business to Consumer (B2C) transactions of goods.
Which businesses are affected by the EU’s ecommerce package?
The new rules will impact you, if you do one of the following:
- Sell or supply goods from Northern Ireland to non-VAT registered customers in the EU
- Make supplies of goods from the EU to non-VAT registered customers in Northern Ireland
- Send low value goods to the EU or Northern Ireland, from outside the EU and Northern Ireland (including from Great Britain (England, Scotland and Wales))
- Non-EU businesses with goods located in Northern Ireland at the point of sale
These changes also affect online marketplaces that facilitate the sale of goods:
- That are located in the EU or NI and sold by non-EU businesses to non-VAT registered customers (B2C), in EU and NI
- From Great Britain to consumers in Northern Ireland and the EU
A summary of EU’s ecommerce package, effective 1st July 2021
From the 1st July, there will be a number of changes to the B2C sale of goods between Northern Ireland the EU as well as the import of low value B2C goods into the EU or Northern Ireland from outside the EU.
- A new single EU-wide threshold of £8,818 (€10,000) will be introduced for the B2C sale of goods in the EU. This threshold only applies to sales of B2C goods to and from Northern Ireland. If you send goods from the EU to consumers in Northern Ireland and exceed the threshold, you will have to account for UK VAT in the United Kingdom.
- Online marketplaces will be liable for collecting and accounting for VAT on goods supplied to consumers in Northern Ireland, under certain circumstances
- The EU will remove low value consignment relief on imported goods, which relieves import VAT on consignments of goods of up to €22. Low value consignment relief was removed in Northern Ireland on 1 January 2021 in line with the wider UK reforms
Online Marketplaces (OMP)
- For goods sent from Great Britain to Northern Ireland via an online marketplace that is registered for the Import One Stop Shop IT system (see below), the online marketplace will be liable for payment of VAT on non-excise goods in consignments not exceeding a consignment value of €150 (£135), rather than the seller
- The overseas seller is therefore deemed to be making a zero-rated supply to the OMP
- The online marketplace is required to keep records of the sellers’ transactions in sufficient detail to enable tax authorities in the country of the customer to check that VAT has been correctly accounted for. These records should be held electronically for at least 10 years after the year of the transaction
- Marketplaces can opt out of the scheme and the VAT obligations then pass to the delivery company of the seller
Supplies of services to or from Northern Ireland do not count towards distance selling threshold
Implementation of the EU’s ecommerce package is in accordance with the UK obligations under the Northern Ireland Protocol.
It is important to note that the Northern Ireland Protocol only applies to goods and not to services. This means that the UK’s implementation of the EU’s ecommerce package will only apply to supplies of goods in respect of Northern Ireland, so if you supply services to or from Northern Ireland, these will not count towards the distance selling threshold.
You can read the full HM revenue & customs policy document here