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:

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  • Great Britain: This information is no longer applicable.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.
  • 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:

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

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:

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