Brexit Northern Ireland 'XI' VAT and EORI number
- Feb 10, 2021 | Richard Asquith
Following the end of the Brexit transition period on 31 December 2020, Northern Ireland ('NI) has a dual position in the EU Customs Union, Single Market and VAT regime as well as in the UK’s equivalents for goods only. A Brexit free trade deal with no goods tariffs or quotas was announced 24 December 2020. This had no material bearing on the NI position.
This blog explains the new 'XI' VAT and EORI (see below) numbers are now to be used on invoices, statistical reporting and customs documents to help HMRC and the EU follow transactions. These transactions under the NI Protocol are:
- Goods are located in NI at the time of sale;
- Goods supplied B2B in NI by VAT-registered EU businesses; or
- The sale or movement goods from NI to EU
All of the continuning trade between NI and EU will still be recorded in the UK VAT return in boxes 2, 8 and 9 of the VAT return as EU transactions - acquistions and dispatches. Northern Ireland VAT Triangulation transactions are also still possible.
Firstly, tell HMRC that you are trading in NI
If you are a UK VAT-registered business you should tell HMRC if you are a party in any of the above Protocol transactions so that:
- you’ll be eligible to use the below VAT simplifications when you trade with the EU
- your suppliers are able to zero rate goods that they dispatch to you from the EU
- your trade with the EU will remain acquisitions and dispatches when accounting for VAT
How will this affect the VAT treatment on goods?
B2B NI – Ireland goods movements
For NI trade with GB, this is treated as a domestic UK transaction so UK VAT applies. Goods moving between Ireland and NI established traders are unchanged, and continue to be treated as movements across internal EU borders. For B2B, this means they remain intracommunity VAT zero-rated transactions. Traders will have to obtain an 'XI' EORI number, see below, for certain Protocol transactions detailed below. These are used on sales invoices and various declarations to help the tax authorities understand the tax treatement.
B2C NI – Ireland goods sales
B2C sales between NI to Ireland are still be subject to the distance selling threshold rules – but then subject to the VAT of the consumer’s country of residence. Note this changes on 1 July 2021 under the EU e-commerce package when distance selling thresholds are scraped. Instead, NI sellers to Irish (or any EU consumer) will be able to use a single VAT return (One-Stop-Shop, OSS). For the 2021 UK ecommerce VAT reforms, there are special rules on B2C goods held in NI by overseas sellers.
B2B NI – GB goods movements
Any B2B goods moving between NI and GB are treated as domestic UK VAT supplies for VAT. Contrary to the Protocol, the UK has chosen to treat GB to NI as a domestic transaction, using Articles 201 and 211 of the EU VAT Directive to allow it to be flexible, and is prioritising the integrity of the UK's VAT union. This means it is considering its sales VAT as simulating the effect of import VAT rather than as a domestic supply. The EU has accepted this, although some EU member states are using the 'XU' country code to identify GB-transactions as separate from NI or UK transactions.
The section below covers the VAT treatments, and the use of NI XI VAT country codes.
NI 'XI' VAT ISO country code
The UK and EU have agreed the above transactions should use the ‘XI’ country code instead of ‘GB’ for VAT numbers on invoices and statistical declarations. This is based on the UK view that NI-GB is a domestic transaction.
Below is a provisional analysis of the various B2B transaction permutations, and how to use the ‘XI’ country code in invoices and statistical reporting (EC Sales Listing). Businesses should substitute ‘XI’ country code in their GB VAT number on invoices so that the transactions can be identified separate from UK VAT transactions. So XI 123456789 - instead of GB 123456789.
There is no requirement to apply for a new 'XI' VAT number. Businesses with NI postcodes will automatically be assumed to be operating within the terms of the NI Protocol. NI businesses may also use the EU VAT refund scheme. Any business which has not received an 'XI' number that it believes it will need should contact HMRC.
|Country/State||Type||Ship from||Ship to||EU rules Seller (reverse for buyer)||Transaction type|
|1 Northern Ireland B2B sales||Goods||NI||GB||GB to GB||UK domestic|
|Goods||NI||NI||GB to GB (XI if EU party)||UK domestic|
|Services||NI||GB||GB to GB||General rule|
|Goods||NI||EU||XI to EU||Intra-community|
|Services||NI||EU||GB to EU||General rule|
|Goods & Services||NI||GB||GB to GB or Spilt on an invoice-by-invoice basis||UK domestic|
|Goods & Services||NI||EU||XI to EU or Spilt on an invoice-by-invoice basis||Intra-community & Export|
|Goods||NI||Third Country||GB to 3rd country||Export|
|Services||NI||Third Country||GB to 3rd country||General rule|
|2 Great Britain B2B sales||Goods||GB||NI||GB to GB (XI if EU party)||UK domestic|
|Services||GB||NI||GB to GB||UK domestic|
|Goods||GB||EU||GB to EU||Export|
|Services||GB||EU||GB to EU||General rule|
|Goods & Services||GB||NI||GB to GB||UK domestic|
|Goods & Services||GB||EU||GB to EU||Export/General rule|
|Goods||GB||3rd country||GB to 3rd country||Export|
|Services||GB||3rd country||GB to 3rd country||General rule|
|Goods||GB||EU via NI||GB to EU||Export from GB with seller self accounting for UK import VAT; Then Intra-community NI to EU.|
|3 EU Member State B2B sales||Goods||EU||GB||EU to GB||Export|
|Services||EU||GB||EU to GB||General rule|
|Goods||EU||NI||EU to XI||Intra-community supply|
|Services||EU||NI||EU to GB||General rule|
|Goods||EU||GB||GB via NI||UK import with domestic supply: EU seller import VAT via UK VAT return; then UK VAT domestic supply|
B2C goods from GB to NI
If the recipient is a NI resident, then UK VAT is due and should be charged by the GB seller. If the goods though are dispatched to a Ireland address and posted via NI, then they are an import. Under current EU rules, they are exempt for VAT if they do not exceed €22 / £15. If above this, then EU import VAT is due by the customer or seller. It is likely that reporting the import VAT by the seller will be the easier option.
The EU plans to withdraw the €22 import VAT threshold in July 2021.
Cross border services between NI, GB and EU are not part of the NI Protocol dual arrangement. Service transactions between NI and EU are treated as any other between the EU and a third country.
EU VAT recovery
NI businesses will also benefit from continuing access to the EU 8th Directive VAT reclaims electronic portal. This will enable them to easily reclaim EU VAT incurred on travel, entertainment, travel, promotion and advertising expenses incurred in any EU member state.
Whereas GB businesses will have to use the burdensome paper-based country-by-country 13 Directive reclaims process after 31 December 2020.
What EU VAT rules will apply in NI
HMRC will be responsible for administering in NI the following EU VAT rules (Annex 3 of the Protocol) :
- EU VAT Directive, covering the rules of VAT compliance and reporting
- 8th VAT Directive, covering EU VAT refund claims
- 13th VAT Directive, covering EU VAT claims by non-EU businesses
- Administrative cooperation with EU states on VAT fraud detection
- VAT and duty exemptions on import of personal goods and third countries
- VAT exemption on certain final imported goods
- Obligations towards Norway on anti-VAT fraud cooperation
- Obligations towards Switzerland on combating fraud
- 2008 general arrangements and administration cooperation on excise duties
NI EORI 'XI' numbers
If you are moving goods between NI and EU under the NI Protocol you will need a new special 'XI' EORI number.
An EORI (Economic Operator Identification Number) is a unique number that identifies a trader with Customs. It is required on customs exit and entry documents to ensure goods can be processed – plus other Customs communications. Traders in the EU only need one to cover all 27 member states. Following Brexit, and UK companies leaving the EU Customs Union after 31 December 2020, they will retain their GB EORI, but will need a second, EU number if importing into the EU.
The NI number will be made up of your UK VAT number, with ‘GB’ replaced by ‘XI. HMRC will automatically issue traders with this number if they believe traders are shipping goods outside.
From 1 January 2021 NI businesses will need an EORI number that starts with XI to:
- move goods between NI and non-EU countries
- make a declaration in NI
- get a customs decision in NI
To get an EORI number that starts with XI, traders must already have an EORI number that starts with GB. If they do not have one, they should apply for an EORI number that starts with GB as soon as possible.
Need help with your UK VAT compliance?
Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade.