NI remains in the EU VAT regime for goods
VAT compliance can be a stressful process for many businesses. With regulations changing and new schemes coming into play it can become overwhelming. Unlike GB, Northern Ireland has stayed within the EU VAT regime for goods to a large extent. Businesses in NI can still process EC Sales and use the reverse charge mechanism with businesses in the EU and declare these on their UK VAT return and EC Sales List. Northern Ireland VAT registrations can be verified on the EU VIES system using the prefix XI instead of GB, making trade with NI much more convenient for European businesses than other regions of the UK, as the VAT can be zero rated B2B. Goods can also be moved been EU countries and NI under the normal EU process of Dispatches and Acquisitions (VAT registration in each country would be required to declare cost price movement of goods).
Registering for VAT in the UK
EU businesses who wish to fulfil through NI should also take advice on registering for UK VAT as holding stock in NI will be deemed as making taxable supplies in the UK. UK VAT will need to be charged on the sales. The EU business will need to account for movement of stock into NI and also sales VAT on orders to all UK customers on their HMRC UK VAT Return.
Registering for the VAT One Stop Shop
For sales to non-VAT registered customers, Northern Ireland based businesses are able to utilise the Union One Stop Shop for EU VAT (separate registration) so sales to all countries in the EU can be accounted for on one HMRC OSS VAT return based on the destination country of the customer. The net XI - EU sales should also be declared in Boxes 6 & 8 of the business' UK VAT return. If this is all in place, their should be no nasty VAT or Duty surprises for customers when they receive their goods from Northern Ireland retailers. The most important advice is to, 'take advice'!!
Holding Stock in the EU
From an e-commerce fulfilment point of view, retailers need to be very careful about holding stock in the EU. This will immediately trigger a VAT registration requirement in the warehouse country. You may see a great fulfilment set up in Germany for example but to hold your goods in a 'Fulfilled By Amazon' warehouse or an independent German warehouse you will need to secure a domestic VAT registration in that country and submit returns every month/quarter for sales to customers in that country and movement of your goods to that country. VAT registration is mandatory when you hold stock even if you haven't made one sale yet! If you hold stock in our NI warehouse you could use your UK VAT return and OSS registration to sell into the EU, as long as you have declared your goods 'At Risk' of moving to the EU when you send them to NI, and paid any applicable duty or claimed a customs duty waiver if you are within the subsidy limit for state aid.