The UK’s HMRC has updated its guidance on the distance selling obligations for goods being sold from Northern Ireland to consumers in the EU. This reflects the EU e-commerce VAT package of 1 July 2021, and how that works given NI’s dual status in the UK and EU VAT regime and Customs Union.
Distance selling in this case is where a NI seller (or goods started in NI for any seller) is selling to non-VAT registered consumers in one of the 27 EU member states – so cross an EU border. Under the terms of the NI Protocol, this is not an import, but remains under the pre-Brexit rules.
EU €10,000 distance selling threshold and NI sellers
The NI seller may use the EU €10,000 distance selling threshold which allows them to sell to all EU states under UK VAT rules until their total sales all states hits this limit. This means charging UK VAT and reporting it to HMRC. Sales are still reported in boxes 1 (outputs) and 6 (value of supplies) in the UK VAT return.
OSS via HMRC once over the threshold
Once over this threshold, the NI seller will have to start charging the VAT rate of the country of residence of their EU consumers, report and remit the VAT. To do this, the NI seller can either VAT register in the EU states individually, or start using the EU One Stop-Shop OSS VAT return. This enables a single return each quarter listing all the sales per EU member state and a single tax payment.
For NI sellers, this is done be notifying HMRC by the 10th of the month following crossing the threshold. You will then report quarterly to HMRC, including remitting the EU VAT charged and collected. Note, sellers in the rest of the UK – Great Britain – must register with one of the EU member states if they wish to use OSS for their intra-EU sales to consumers.
Non-VAT registered businesses may still use OSS for NI to EU sales.
B2C Sales from EU to NI
Where EU-resident sellers are transacting with NI consumers, this may also benefit from the €10,000 thresholds. Once over this for all EU sales, the EU seller must UK VAT register with HMRC.
Excise goods excluded
If an NI makes any distance sales of any excise goods (alcohol and tobacco) to an EU member state they will be obliged to register and account for VAT in that EU member state, irrespective of the value involved.