The European Commission has proposed changes to the EU’s VAT rules, in preparation for the end of the transition period with the UK on 31 December 2020. The amendment to the VAT Directive introduces a special identification number for businesses in Northern Ireland, so that EU VAT provisions can be properly applied to goods, in line with the Protocol on Ireland / Northern Ireland.
Under the Protocol, EU VAT legislation will continue to apply to goods traded in Northern Ireland. This broadly means that goods sold and transported from Northern Ireland to the EU (and vice-versa) will be treated in the same way as cross-border supplies of goods within the EU. This includes VAT exemptions and deductions.
The provisions will not apply to supplies of services in Northern Ireland. UK VAT rules will apply after the transition period. Supplies of goods and services made elsewhere in the UK will also be subject to UK rules for VAT.
For more information read the European Commission’s update.