This chapter deal with North South (NI EU) (and vice versa) trade. It  does not deal with purchases or acquisitions where the goods may travel through GB after the effective date of Brexit so that transit obligations may apply. This may occur where the company purchases directly from Europe and the goods move through GB on their way to NI as part of the carriage for that sale. They are dealt with in a separate chapter.

The chapter does not deal with scenarios in which there is a purchase from an EU/ RoI company where the goods are supplied directly into GB. This may involve an import from an EU state into GB. There is a separate chapter which deals with some of these issues.The chapter does not deal with imports from or exports out of the European Union (other than to GB) where UK wide customs rules would apply.

The chapter does not deal with services which are not the subject of the NI Protocol. In particular services in connection with land or buildings have special VAT rules which deem them to be Vatable where the land or services are situated.

EU customs and VAT rules on goods apply

Although the Northern Ireland Protocol says that Northern Ireland is part of the customs territory of the United Kingdom, it also makes clear that it is effectively and for most practical purposes, part of the customs and regulatory territory of the European Union. This implies that there would be absolutely no customs or other controls on goods whatsoever in North-South/ EU and South/EU-North, trade while the NI Protocol applies.

Basically, things will continue exactly as they are, as regards North-South and South-North trade in goods even after the transition period. This would be the case even if there is a very close relationship between GB and the EU or if there is no deal whatsoever and a hard Brexit. The EU customs code will apply in full to Northern Ireland as if it is part of the EU. Most trade rules in relation to goods will apply as if it is part of the EU

It is the clear intention that the EU customs code and EU VAT directives are to apply to Northern Ireland. It is also what is understood by the EU and UK governments. As set out below the UK has also confirmed this, in its Parliamentary reports.

Unless the Northern Ireland Protocol itself is breached or undermined, the  North South (or NI EU trade)  should not face any customs or regulatory barriers in relation to goods either purchased directly from European Union or purchased or transferred from the Republic of Ireland holding or sister company.

EU Goods Rules apply

The key protections of the EU treaties in relation to customs, quantitative restrictions, and barriers to trade will apply as between Northern Ireland and the European Union. This means that the EU wide rules prohibiting hidden barriers to trade apply such barriers can be challenged directly. Therefore, for example, if another EU state placed barriers on traders’  purchasing from their trader, this may be subject to challenge in a private legal action

For the purpose of all trade sanctions, rules and restrictions, Northern Ireland will be part of the EU. Conceivably if the EU put in place sanctions on the UK for breach of the Withdrawal Agreement or other international treaties, the United Kingdom would be obliged to ensure that Northern Ireland policed these sanctions against the UK.

Equally. short of sanctions if retaliation measures are taken between the EU and UK for breach of trade agreements unlawful subsidies et cetera, the UK would have to ensure that such countermeasures are given effect in Northern Ireland even in relation to trade with Great Britain.

Republic of Ireland to Northern Ireland trade

The following is an extract from the UK Parliamentary impact report on the Withdrawal Agreement and sets out the intended treatment for the Northern Ireland Protocol.

 As with current arrangements, goods moving between Northern Ireland and Ireland will not be subject to customs requirements, customs duties or associated checks. ……..As with current arrangements, there will be no tariffs payable on trade between Northern Ireland and Ireland. Therefore, there will be no additional costs relative to current arrangements.

Therefore, the position would remain as it is at present. There would be no export procedures in the Republic of Ireland and no import procedures in Northern Ireland. There would be no import duty tariffs or other taxes.

Because the system under the Withdrawal Agreement is asymmetrical in that imports into Northern Ireland destined for the EU from GB are subject to some controls, it may be that the UK enacts some general principle or legal obligation that controls the terms and conditions on which a sale can be made from the Republic of Ireland business to a Northern Ireland business followed by an immediate sale on to a Great Britain business. It might be policed very lightly.


The intention is that the EU rules which define the common EU basis of VAT will apply in relation to Northern Ireland. At present, there is one single value added tax legislation throughout the United Kingdom. The intention under the Northern Ireland Protocol is that Northern Ireland would have certain EU linked elements in its VAT system. This would mean that the present EU arrangements would apply for VAT purposes in relation to trade with Northern Ireland. It is not clear to what extent, if any, this might affect the intra-UK VAT system than applies at present.

As at present, a direct business to business (VAT registered) sale would be zero-rated in the Republic of Ireland, and the Northern Ireland VAT registered business purchaser would self-account. The same principles will apply to transfers between group companies.

Strict conditions apply to obtain the zero rating in VAT at present in the state of export by reason of the obvious possibility of fraud. These are dealt with in more detail elsewhere Provided there are direct sales to Northern Ireland with the goods moving from the Republic of Ireland to Northern Ireland, and the relevant proofs and documents are kept, zero rating should be secured.

The position is more complicated where the goods are delivered elsewhere including in particular to GB as this would involve an EU export and a GB import subject to different VAT and customs duty rules. This type of case is dealt with elsewhere.

Equally a business to business sale by traders  to a VAT registered business in the Republic of Ireland or elsewhere in the EU  would be zero-rated in Northern Ireland and the Republic of Ireland/EU buyer/acquirer would self-account for VAT, subject to the conditions which apply at present being complied with.

Continuing VAT Position on Cross Border Sales

On a supply of goods by an RoI business  outside of Ireland to an EU state including to the UK pre-Brexit and to NI after the effective date of Brexit with the NI Protocol in place, the following treatment applies. Subject to the below conditions, the supply is technically exempted in the Republic of Ireland and is treated as if it was a zero-rate supply. A supply of goods includes both the sale or transfer of goods by agreement or the transfer of goods from an RoI business to its branch or group company in another EU State.

The general rule is that a supply of goods takes place where the goods are located at the time of the supply. The exceptions to the general rule include an Intra-Community Supply (ICS), where the customer is a VAT-registered business in another EU State. The supply is deemed to take place in the EU State that issued the customer’s VAT number. This means that VAT is chargeable in the EU state in which the business customer is established and is not charged where the supplier is established

The exemption with an effective zero rate of VAT can apply to an intra-Community supply (ICS) if the following conditions are met:

  • the customer must be registered for Value-Added Tax (VAT) in another Member State
  • the supplier must obtain and retain the customer’s VAT registration number (including country prefix)
  • quote its VAT number and the customer’s VAT number on the sales invoice and
  • the goods must be dispatched or transported to another Member State
  • proof of the above must be kept.

If any of the above conditions are not satisfied, the supplier must charge Irish VAT at the appropriate rate.

It Irish Revenue (or HMRC for a NI to RoI sale) are not  satisfied that the goods have been sold and delivered to a VAT registered person in another Member State, then the supplier could  become liable and must charge Irish (or in the latter case, UK) VAT. However, if the conditions for zero-rating are subsequently established then:

  • the customer is entitled to recover the VAT he or she has paid
  • the supplier can then make an adjustment in their VAT return for the period.

Equally, the sale of goods or a movement of goods by the company out of NI to another EU state including the Republic of Ireland to a VAT registered business in another EU state may be effectively exempted, subject to complying with the similar conditions laid down in UK VAT law.

Company as VAT Registered Buyer Self-Accounts

In the above circumstances, a NI VAT registered business as the buyer or acquirer of the goods after the effective date of Brexit assuming the NI Protocol applies, would self-account for VAT. Under the common EU rules which are to apply under the NI, Protocol the supply and hence the VAT charging point occurs in NI in these circumstances and the NI business  as a VAT registered entity self-accounts for VAT.

The NI business where the goods are being purchased for a vatable purpose may take a simultaneous input credit in respect of the purchase which offsets the VAT liability that arises by reason of the import. There are strict and subtle conditions. The goods must be dispatched from the state where the supplier’s VAT number is registered. The integrity of the system is upheld by the VIES returns and Intrastat returns. A NI business would continue to be obliged to make such returns if its turnover is within the relevant thresholds in the latter case.

The following HMRC guidance shows the VAT treatment of the buyer / recipient who is VAT registered, in the UK at present.

An acquisition in the UK occurs where there’s an intra-EU movement of goods to the UK, and the goods are received in the UK by a VAT-registered trader the supplier is registered for VAT in the member state of departure. In this case, the recipient is required to account for VAT on the goods acquired in the UK.

Traders must account for any tax due on UK VAT Return for the period in which the tax point occurs (see paragraph 7.3), and traders may treat this as input tax on the same VAT Return subject to the normal rules

The time of acquisition is the earlier of either the:

  • 15th day of the month following the one in which the goods were sent to you
  • the date the EU supplier issued its invoice to you

Acquisitions are liable at the same rate as domestic supplies of identical goods in the UK. So, for example, no tax is due on acquisitions of goods which are currently zero-rated in the UK

Detailed rules

The above is the intent of the position under the Withdrawal Agreement. There will need to be adjustments in the Northern Ireland VAT system and customs rules. They are now UK wide rules so some new measures will be needed to differentiate between the Northern Ireland position and Great Britain position.

Many of the detailed rules will be made by UK ministerial order. In some cases, this will follow discussions between EU representatives and UK representatives in the Joint Committee. There may be input from the North-South Ministerial Council and North-South bodies set up under the Belfast Agreement.

An EU UK joint consultative working group is established by the Withdrawal Agreement. It is designed to secure exchange of information, planning proposals and the formulation of implementation measures to make the Northern Ireland Protocol work. The EU and UK must share information.

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