On 31 July, the European Commission proposed changes to the EU’s VAT rules, in preparation for the end of the transition period with the UK. This amendment 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 in respect of goods traded in Northern Ireland. Goods sold and transported from Northern Ireland to the EU, or EU to Northern Ireland, will be treated the same as cross-border supplies of goods within the EU.
This will not however apply to supplies of services in Northern Ireland, which will be subject to UK VAT rules after the transition period.
Supplies of goods and services made elsewhere in the UK will also be subject to UK VAT rules. These changes will require adjustment to systems and processes and so the Commission is proposing them well in advance.
The Commission is encouraging Member States to agree to the proposal, so that it can be implemented as quickly as possible and in any case before the end of the transition period. Similar work is ongoing in respect of excise duties.