As 31 October looms, Irish traders buying goods from the UK need to consider how their position will change post-Brexit. This note compares Irish traders’ VAT and customs positions pre- and post-Brexit and sets out simple actions that traders should take now to minimise the impact on their business.
Acquisition of Goods in Ireland from the UK
The acquisition of goods by Irish VAT registered traders from other EU Member States, including the UK, is an ‘intra-community acquisition’. Currently, Irish VAT is payable by the Irish trader on all intra-community acquisitions on a bi-monthly basis and not at the point of import. The Irish trader is usually entitled to a simultaneous input credit for that VAT meaning that the VAT has no impact on cash flow.
Post Brexit, the acquisition of goods in Ireland from the UK will no longer be an intra-community acquisition. Instead, the rules applying to importations from outside the EU will apply, having a significant impact on cash flow for traders bringing goods into Ireland from the UK.
In order to ease the cash flow burden, Irish Revenue have introduced a deferred accounting system which will allow importers of goods to defer the VAT due at the point of import by up to two months until their next VAT return is due. The postponed accounting system will apply automatically to traders importing goods into Ireland post-Brexit. However, Revenue authorisation is required for continued qualification for postponed accounting.
Customs duty is applied to the importation of goods in the EU from a country outside the EU. Post-Brexit, goods imported into Ireland from the UK may attract customs duties, depending on the nature of the goods. Irrespective of the deal reached, Irish traders should review their supply chains and identify the relevant tariff classifications to confirm the duty rates that will apply. Revenue can assist in the confirmation of the relevant classification codes where required.
As well as added cost, customs also brings an administrative burden for Irish importers. Irish traders importing goods from the UK must have an Economic Operator Registration and Identification number (“EORI number”). All traders who will be importing goods from the UK post-Brexit should apply for an EORI number now through Revenue Online Services (“ROS”) (if they have not already done so). Helpfully, certain traders can apply for Authorised Economic Trader (“AEO”) status, which means that they will be recognised as a trusted trader and will have access to simplified customs procedures. However, not all businesses will be eligible for AEO status. Businesses should check their eligibility to apply for AEO status given the benefits it offers.
1. apply for an EORI number – this is essential and should be done as soon as possible;
2. review supply chains to understand the movement of goods;
3. confirm the classification codes of goods imported from the UK using the EU Commission’s online customs database; and
4. confirm the valuation of the goods being imported from the UK.