Solution Properties
Solution ID:
222001000101382
Last Modified Date:
Fri Oct 13 09:42:17 UTC 2023
Taxonomy Path:
Case category//How do I...//governmental/legislative compliance
Author:
[email protected]
Sell goods to EU consumers (NI)
Description

Overview for businesses in Northern Ireland

On 1 July 2021, the EU introduced an optional VAT scheme for the sale of goods to EU customers who are not VAT registered (also known as EU consumers).

Instead of having to register and pay VAT in each country you sell to, you can choose to report and pay EU VAT through a single return using the One Stop Shop (OSS).

Alongside the introduction of the OSS, the EU abolished distance selling thresholds. This means you may now have distance sales of goods which are subject to destination VAT. If you have an XI VAT registration, you can use OSS to report intra-community distance sales of goods.

If you use OSS you will need to charge destination VAT at point of sale. Instead of charging VAT at the UK rate (or home rate), you will charge VAT at the rate where your customer lives.

This means there is no import VAT upon arrival in the EU, making it easier for your end customer.

Cause
Resolution

Register for OSS >

The OSS is an optional VAT scheme.

You can register in an EU member state. Once registered you can report all relevant EU VAT through a single return and make a single payment to the member state you register with.

HMRC also plans to provide an OSS portal for businesses trading with the EU under the Northern Ireland Protocol.

HMRC guidance on the One Stop Shop schemes (opens in new tab) >

Create a sales invoice with destination VAT >

Before you start

If you need to charge destination VAT, check that you have added destination VAT rules in financial settings. Read our Set up financial year, accounting dates and VAT > article for more information.

  1. Go to Sales, Sales Invoices, and select New Invoice.
  2. In the Customer field, select your EU customer from the list, or type the customer name. If the customer is not a saved contact, select Add a customer to create a record for them.
  3. On the first invoice line, select a product from the list, or start typing its name to find it. If the product is not a saved item,enter a description for the item or select Create item to create a record for it.
  4. In Goods/Services select Goods (and related services) to apply destination VAT rules. The destination VAT rate will automatically calculate.

     TIP: To make sure that destination VAT calculates, check that you added:

    • destination VAT rules in financial settings
    • an EU customer that is not VAT registered
     

    Repeat steps 3 and 4 on a new line for as many items as you need to add to your invoice.

     TIP: If you need to add a service item that does not have destination VAT rules, you must create a separate invoice. This is because invoices cannot contain a mixture of home VAT rules and destination VAT rules. 

  5. Select Save.

The VAT return

Sales of goods are reported in Box 6 - total value of sales and all other outputs excluding any VAT and Box 8 - Total value of all supplies of goods and related services, excluding any VAT to other EC Member States.

The VAT element on destination VAT sales is excluded from your VAT return. You need to report this on your OSS VAT return through the OSS system.

If your business uses the flat rate VAT scheme, it will only affect Box 6 – the total value of sales and all other outputs excluding any VAT.

Destination VAT report

The OSS Sales Analysis in Reporting shows all sales where destination VAT has been charged. This will help you to complete your OSS VAT return through the OSS system.

Create a sales invoice without destination VAT >

Overview

If you choose to sell goods to an EU consumer without destination VAT, the VAT is charged at the UK rate (or home rate), and you need to make a customs declaration.

Before you start, make sure you have an Economic Operators Registration and Identification (EORI) number starting with XI.

HMRC guide to exporting goods from UK (opens in new tab) >

  1. Go to Sales, Sales Invoices, and select New Invoice.
  2. In the Customer field, select your EU customer from the list, or type the customer’s name. If the customer is not a saved contact, select Add a customer to create a record for them.
  3. On the first invoice line, select a product from the list, or start typing its name to find it. If the product is not a saved item,enter a description for the item or select Create item to create a record for it.
  4. In Goods/Services select Goods (and related services) for each invoice line. Select the VAT rate that you would apply if the purchase was made in the UK.
  5. Repeat on a new line for as many items as you need to add to your invoice.
  6. Select Save.

The VAT return

Sales of goods to all overseas businesses and consumers are reported in Box 1 - VAT due in this period on sales and other outputs and Box 6 - total value of sales and all other outputs excluding any VAT.

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