Trading in EU countries

Brexit transition changes from 1 January 2021

Some of this information will no longer be applicable to the UK after the Brexit transition. Please check the notes in each section for any changes.

When trading with customers and suppliers from EU countries, you must set up VAT rates, ledgers and customer and supplier accounts to ensure correct processing of:

If you are registered for VAT and deal with other registered customers in the EU, you need to submit an EC sales list (HMRC) or VIES return (Irish Revenue), if you:

  • Supply goods and certain services.
  • Send goods for processing, or return goods from processing.
  • Transfer your own goods to another EU country.

Brexit transition changes from 1 January 2021

  • Great Britain: You will not need to submit your EC Sales List (ESL) for the export of goods or the supply of services made to EU businesses on or after 1 January 2021. You will still have to submit your EC Sales List for sales made before 1 January 2021.

  • Northern Ireland: You'll still need to submit EC Sales Lists (ESLs) if you sell goods to EU VAT-registered customers.

  • Ireland: No change.

HMRC: How to report your EU sales for VAT

If you are registered for VAT, you must supply a report of your VAT liability, known as the VAT Return, to the relevant authorities.

All relevant boxes on the VAT Return are updated for goods moved between countries.

Note: You can account for the VAT on the goods and services you acquire as a reverse charge, provided you are registered for VAT and the acquired goods exceed specific amounts and are for business purposes.

If you sell or acquire goods in the EU, the value of which exceeds an annual threshold (set by HMRC in the UK or the Revenue Commissioners in Ireland), you must submit monthly Intrastat declarations (SSDs).

Sage 200 provides the information and reports required to make Intrastat submissions. However to complete intrastat, you must use the Commercials modules The Commercials modules in Sage 200 are Stock Control, Sales Order Processing and Purchase Order Processing. and activate the following settings:

  • Generate Intrastat entries for sales orders option in the Intrastat tab of Sales Order Processing Settings.
  • Generate Intrastat entries for purchase orders option in the Printing tab of Purchase Order Processing Settings.

Brexit transition changes from 1 January 2021

  • Great Britain: You will still need to report on goods arriving from the EU, but not goods departing to the EU.
  • Northern Ireland: No change. You will still need to report on goods both arriving from the EU and departing to the EU.

Supplying goods and services

Brexit transition changes from 1 January 2021

  • Great Britain: This information is no longer applicable.

  • Northern Ireland: This information is only applicable to supplying goods to the EU, but no longer applies to services.

  • Ireland (ROI): No change.

When supplying goods and services to EU countries, several scenarios can apply.

  • To supply goods and services to VAT registered customers.

    • You must:

    • Set up a VAT rate to apply to transactions:

      • VAT Return

      Select the VAT Return check box.

      Terms

      • Select Sales Goods and Related Services if you are supplying goods and there are services directly associated with the supply of the goods; for example, freight charges, charges for goods and services.
      • Select Sales Non-Related Services if you are supplying services that do not relate to goods you are supplying.

      % (VAT rate)

      Set at 0.00%.

    • Set up the customer account:

      • Enter the relevant country code.
      • Enter the customer's VAT registration number.

    The value of the goods will appear in boxes 6 and 8 of the UK VAT Return. The details are included on the EC Sales List.

    You must:

    • Set up a VAT rate to apply to transactions:

      • VAT Return

      Select the VAT Return check box.

      Terms

      Select Not Applicable.

      % (VAT rate)

      Set at the prevailing rate for the goods.

    • Set up the customer account:

      • Enter the relevant country code.
      • Leave the customer's VAT registration number blank.

    The value of the VAT will appear in box 1 on the UK VAT Return and the value of the goods in box 6. No EC sales list entry is required.

  • To supply goods and services to non VAT registered customers.

    When customers do not supply a VAT registration number, you must charge VAT on the goods supplied at the prevailing rate applicable in the country of supply.

    When companies are involved in distance selling, there are three scenarios:

    You must:

    • Set up a VAT rate to apply to transactions:

      VAT Return

      Select the VAT Return check box.

      Terms

      • Select Sales Goods and Related Services if you are supplying goods and there are services directly associated with the supply of the goods; for example, freight charges, charges for goods and services.
      • Select Sales Non-Related Services if you are supplying services that do not relate to goods you are supplying.

      % (VAT rate)

      Set at the prevailing rate in the supply country.

    • Set up the customer account:

      • Leave the country code blank.
      • Leave the customer's VAT registration number blank.

    The value of the VAT will appear in box 1 on the UK VAT Return and the value of the goods in boxes 6 and 8. No EC sales list entry is required.

    You must:

    • Register for VAT in the country to which you are selling.
    • Enter the VAT registration number for that country against the relevant country code within Accounting System Manager.

    • Set up a VAT rate to apply to transactions:

      VAT Return

      Select the VAT Return check box.

      Terms

      • Select Sales Goods and Related Services if you are supplying goods and there are services directly associated with the supply of the goods; for example, freight charges, charges for goods and services.
      • Select Sales Non-Related Services if you are supplying services that do not relate to goods you are supplying.

      % (VAT rate)

      Set at 0.00%.

    • Set up the customer account:

      • Enter the relevant country code.
      • Leave the customer's VAT registration number blank.

    The value of the goods appears in boxes 6 and 8 on the UK VAT Return. No EC sales list entry is required.

    • Set up a VAT rate to apply to transactions:

      VAT Return

      Do not select the VAT Return check box.

      Terms

      • Select Sales Goods and Related Services if you are supplying goods and there are services directly associated with the supply of the goods; for example, freight charges, charges for goods and services.
      • Select Sales Non-Related Services if you are supplying services that do not relate to goods you are supplying.

      % (VAT rate)

      Set at the prevailing rate in the supply country.

    • Set up the customer account:

      • Enter the relevant country code.
      • Leave the customer's VAT registration number blank.

    The value of the goods appears in boxes 6 and 8 on the UK VAT Return. No EC sales list entry is required. Invoices will show the value of the goods and the value of the VAT at the rate you have specified.

    Note: You also need to complete a VAT Return in the country of delivery. This must be done manually as Sage 200 does not provide this facility.

    • Note: For more information, refer to the documentation published by your local authority.

Triangulation is the term used to describe the supply of goods between EU countries that involves three parties.

For example, an Irish company receives an order from a customer in Germany. To fulfil the order the Irish company purchases the goods from their supplier, based in France. The goods are delivered directly from the French supplier to the German customer.

The invoice for the goods is sent to the German customer from the Irish company.

As the goods do not enter Ireland, an indicator must be placed on the EC Sales list to show that the sale represents a triangulation transaction.

To mark sales as triangulated on the EC Sales list in Sage 200, you must select the Triangulated checkbox when entering the following types of transaction:

Module Type of transaction
Sales Ledger

Invoice

Free Text Invoice

Credit Note

Batch Invoice

Batch Credit Note
Sales Order Processing

Sales Order - Full | Delivery and Invoicing

Sales Order - Trade | Delivery and Invoicing

Repeat Order Template | Delivery and Invoicing

Sales Return | Return and Credit

Quotation | Delivery and Invoicing

Pro forma | Delivery and Invoicing

Note: If you have created the sales order using Sage 200 CRM, you must amend the order in Sage 200 and select the Triangulated checkbox from the Delivery and Invoicing tab in the sales order.

Accounting for VAT as a reverse charge when acquiring goods and services from EU suppliers (Ireland and Northern Ireland)

Brexit transition changes from 1 January 2021

  • Northern Ireland: This information is only applicable for acquiring goods from EU suppliers, but not services.

  • Northern Ireland (and Great Britain): You can use the reverse charge procedure for purchasing services from abroad, if the place of supply is the UK.

    See Accounting for VAT as a reverse charge when acquiring services from abroad (UK only).

  • Ireland (ROI): No change. This information is applicable for using the reverse charge procedure with EU suppliers.

Reverse charge VAT is a term that covers the following scenarios:

  • Accounting for VAT as a reverse charge on services supplied to a UK business from abroad.

  • Accounting for VAT as a reverse charge on goods or services supplied to an Irish or Northern Irish business from an EU business.

  • Accounting for VAT as a domestic reverse charge to prevent fraud in trade between businesses within the UK centres. This is known as carousel fraud or missing trader intra community (MTIC) fraud.
  • Accounting for VAT for the Construction Industry Scheme (CIS) in the UK.

You set up VAT rates differently for each of these scenarios.

This section describes setting up VAT rates to account for VAT as a reverse charge on goods and services supplied from an EU business to a business in Ireland (ROI) or Northern Ireland. For information about setting up other types of reverse charge VAT, see Accounting for VAT as a reverse charge when acquiring services from abroad (UK only), Domestic reverse charge VAT rates for preventing carousel fraud in the UK, or Reverse charge VAT rates for the CIS (UK only).

When you acquire goods and services from EU suppliers (outside your country), you can pay the VAT on the goods and services you acquire as a reverse charge, provided you are registered for VAT and the acquired goods exceed specific amounts and are for business purposes.

See Revenue: What is reverse charge (self-accounting).

From a VAT perspective, you are acting as if you are both supplier and customer. This means:

  • EU suppliers can transfer the goods to you at a zero rate of VAT and without customs control.
  • You declare the VAT as output VAT. The VAT point date is the earlier of the invoice or receipt, or the 15th (UK) or 23rd (Ireland) in the month following the month in which you received the goods. You pay this VAT at the VAT rate generally accepted for those goods in your country.
  • Where input VAT is allowable for the acquired goods, the VAT for the acquisition is treated as input VAT on the same VAT Return as the output VAT. This cancels out the corresponding output VAT, meaning that you pay no VAT at all for the acquired goods.

How to account for VAT as a reverse charge when acquiring goods and services from EU suppliers

You must:

  • Give your VAT registration number to your EU suppliers.

  • Set up a VAT rate to apply to transactions:

    VAT Return

    Select the VAT Return check box.

    Terms

    • Select Purchase Goods & Related Services if you are buying goods and there are services directly associated with the supply of the goods; for example, freight charges.
    • Select Purchase Non-Related Services if you are buying services that do not relate to goods you are buying.

    % (VAT rate)

    Enter the prevailing rate in your country.
  • Set up the supplier's account details with the relevant country code and their VAT registration number and default VAT rate.

  • Apply the VAT rate you have set up to appropriate acquisitions from EU suppliers (outside your country).

    • Purchase Goods and Related Services: On the UK VAT Return, the value of the VAT appears in both boxes 2 and 4, and the value of the goods in boxes 7 and 9.

    • Purchase Non-Related Services: On the UK VAT Return, the value of the VAT appears in both boxes 1 and 4, and the value of the goods in boxes 6 and 7.

    The reverse charge VAT on your own VAT Return effectively charges you VAT on the goods.

    Note: No nominal postings for VAT are made as the VAT element of the transaction is notional; it is self-cancelling.

For examples of VAT rates, and to determine which rates to use, see:

Sage is providing this article for organisations to use for general guidance. Sage works hard to ensure the information is correct at the time of publication and strives to keep all supplied information up-to-date and accurate, but makes no representations or warranties of any kind—express or implied—about the ongoing accuracy, reliability, suitability, or completeness of the information provided.

The information contained within this article is not intended to be a substitute for professional advice. Sage assumes no responsibility for any action taken on the basis of the article. Any reliance you place on the information contained within the article is at your own risk. In using the article, you agree that Sage is not liable for any loss or damage whatsoever, including without limitation, any direct, indirect, consequential or incidental loss or damage, arising out of, or in connection with, the use of this information.

See also

Other tasks

Reverse charge VAT to prevent carousel fraud (UK)

Reference

Produce your EC Sales List (ESL) or VIES return

Prepare the VAT Return

Manage Intrastat

Set up VAT rates