From 1st January 2021, Ireland’s trading agreement with the UK will change. The UK’s Brexit transition period will end, and in the meantime, business owners will need to make changes to their Irish company.

Irish Company Directors

Companies with only UK resident directors need to make changes to ensure compliance with Irish companies legislation. The changes required are one of the following options:

1. Appoint an EEA resident director;
2. Secure a Section 137 bond to the value of €25,000 which exempts the company from this requirement; and
3. Companies with a “real and continuous link to one or more economic activities” in Ireland can apply for a full exemption.

Trading with The United Kingdom

1. All trading with the UK will be subject to rules for trading with non-EU countries;
2. Importing goods from the UK will require a new process to complete an electronic customs declaration, and VAT and customs charges may also apply;
3. Exporting goods to the UK will require an electronic export customs declaration. There are different VAT rules that also need to be applied; and
4. You will need an Economic Operations Registration and Identification (EORI) number.

Below is a simple Q&A on the most prevalent issues we are experiencing.

The business is selling goods to UK purchasers with a value of less than €150 (£135). What are the implications with VAT?

From 1 January 2021 consignments of goods with a value of €150 (£135) or less that are outside the UK (excluding Northern Ireland) and sold directly to customers in Great Britain should have UK VAT charged at the point of sale. As a result EU sellers will be liable to charge UK VAT at the appropriate rate on goods shipped from the EU to consumers in GB on consignments of £135 or less. 

As any such goods are being sent outside the EU VAT area they are considered exports. The rate of VAT applicable to exports is 0%. Such suppliers must ensure the goods have left the EU and have evidence to support it. Any export will need to be declared to Revenue by way of a customs export declaration, which is submitted electronically. It should be noted a licence is required for the export of certain types of goods and this may need to be made available to Revenue upon request.

One of the key features of the negotiated arrangement between the UK and the EU was in relation to the status of Northern Ireland. Under the new arrangement, Northern Ireland will continue to be treated as an EU Member State for the purpose of VAT on goods, but not services. In short the position pre/post 31 December 2020 in relation to the movement of goods to and from Northern Ireland to the EU remains unchanged.

The business is selling goods to UK purchasers with a value of more than €150 (£135). What are the VAT implications?

For consignments with a value over €150 (£135), normal UK VAT and customs rules will apply on importation of the goods into Great Britain from outside the UK or into Northern Ireland from outside the UK and EU. As such import VAT and potentially customs duty will be due and the supplier will therefore need to consider whether they arrange for payment of the UK VAT and custom duty OR if their customers should be responsible for the payment of any customs duty and VAT arising in the UK (which may make their customers lives easier). 

As any such goods are being sent outside the EU VAT area they are considered exports. The rate of VAT applicable to exports is 0%. Such suppliers must ensure the goods have left the EU and have evidence to support it. Any export will need to be declared to Revenue by way of a customs export declaration, which is submitted electronically. It should be noted a licence is required for the export of certain types of goods and this may need to be made available to Revenue upon request.

As set out above the position pre/post 31 December 2020 in relation to the movement of goods to and from Northern Ireland to the EU remains unchanged.

The business is selling services to UK purchasers. What are the VAT implications?

The VAT treatment applicable to the supply of most B2B services between Ireland and the UK will remain largely unchanged, however there are a number of issues to be considered. Certain services provided to non-business customers, such as consultancy, legal and accounting services should not be subject to Irish VAT. This treatment should apply to services provided to customers in both Great Britain and Northern Ireland.

In circumstances where certain services are supplied to customers outside the EU but “used and enjoyed” in Ireland, this may give rise to Irish VAT implications.

On the supply of electronic services or Software As A Service (SAAS), you will need to charge UK VAT on the supply of the service. Therefore, you will need to register for UK VAT to account for VAT on this supply.

The business is buying goods from GB. What are the VAT implications?

For VAT purposes, imports are defined as goods entering into the EU VAT area. Subject to a trader’s approval to operate under the deferred payment system (“DPS”), there will be no VAT due on goods at the time of importation. Under the DPS, the VAT (and any other applicable import charges and duties) will be due on the 23rd of the month following importation and filed in your VAT return.

Importers will be required to declare each importation to Revenue using Revenue’s Automated Import System (“AIS”).

VAT will apply to the value of the goods plus any shipping costs, insurance costs and customs duty. VAT registered traders will be entitled to claim an input credit in their VAT return for the period in question.

The business is buying services from GB. What are the VAT implications?

As this will constitute the receipt of a service from outside the EU, where appropriate you should self-account on the reverse charge basis for same at the appropriate rate of Irish VAT applicable to such services.

When should a business register for UK (GB) VAT?

You should register for UK VAT if any of the below apply:

• You are selling goods to Great Britain;
• You are buying or selling electronic services or SAAS products to UK.

If you have any further queries or need assistance with any of the above please contact Gallagher Keane Chartered Accountants.

Contact Information

Email: [email protected]

Call: +353 1 9695100

For further information visit Revenue.ie