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Product Updates 422, 421, and 420: Recording intra-EU transactions for Northern Ireland post Brexit (European Union legislation)

Since 31 January 2020, the United Kingdom (UK) is no longer part of the European Union (EU). However, Northern Ireland (NI), while still part of UK, has decided to remain as part of EU. After 31 December 2020, NI has adopted a special, dual position within the EU VAT regime. With this arrangement, Intrastat and VAT transactions between NI and EU and between NI and Great Britain (GB) have to be managed differently.

Exact Globe Next (EGN) has made the following improvements to support this:

  • Better management of XI country code when updating EGN.
  • Better management of Intrastat-related transactions especially those involving NI.
  • Better display of NI transactions in the EU sales list.

Further information on these changes are in the following sections.

Intrastat and VAT numbers, and EU sales list

Intrastat is the recording of movement of goods (but not services) between EU countries. These transactions need to be declared as part of monthly Intrastat reports. This is mandatory for all VAT-registered businesses.

The EU sales list is a list of transactions that include movement of goods between EU member countries. Companies are obligated to submit this list for reporting purposes.

The matrix below covers the VAT treatments for transactions involving NI companies:

B2B border movement

VAT categorization

Treatment and reporting

EU to NI

Intra-community dispatch / arrival

Follows current intra-EU procedure. B2B VAT zero-rated. Includes Intrastat and EC Sales Listings declarations at both ends.

NI to GB

Export from NI

UK VAT due on sales between NI and GB. EU may require export declarations from NI.

Import into GB

As above, UK VAT due. UK government has indicated no import customs declarations required.

GB to NI

Export from GB

UK sales VAT due. No export declaration.

Import into NI

EU VAT due but may be deferred via Postponed Accounting in UK VAT return. Any EU duties due. Import declaration.

The following table explains the cases when GB, NI, or foreign businesses with a UK VAT registration will be required to complete Intrastat. It applies to UK-resident businesses, and foreign businesses with a UK VAT registration.

Goods movements

UK Intrastat required?

Importing into GB from EU

Yes, for 2021

Importing into NI from EU

Yes, until end of NI Protocol (2025)

Exporting from GB to NI

No

Exporting from NI to EU

Yes, until end of NI Protocol (2025)

Exporting goods from UK to EU

No

Prerequisites in Exact Globe Next before recording Intrastat transactions

With the exit of GB from EU, the GB country code needs to be set as a non-EU member state. In addition, specifically for NI companies, the following points apply:

  • As an enhancement, country code XI for Northern Ireland shall be automatically injected into the Globe company upon updating the software. This country shall be part of EU member states while country code GB shall be automatically excluded from the list of EU member states.
  • VAT numbers of debtors and creditors, which are situated in Northern Ireland must be changed with the prefix XI. The country code GB can remain in the address details of these debtors and creditors.
  • VAT codes in the master data of NI debtors and creditors can be maintained as long as they are used for EU goods only.
  • VAT codes and VAT codes for services in the master data of GB debtors and creditors need to be changed so that they are not reflected in the EU listing for transactions.

How Exact Globe Next records Intrastat and VAT numbers

Post Brexit, EGN manages Intrastat and VAT as follows:

  • Sales orders – applicable to all legislations; Intrastat is captured based on the country of the delivery address in the sales order
  • Purchase orders – applicable to all legislations; Intrastat is captured based on the country of the delivery address in the purchase order
  • Purchase financial entries – applicable to all legislations; based on the debtor country code and VAT code (listing or listing goods option in EU tab) in entry lines
  • Sales financial entries – based on the debtor country code and VAT code (listing or listing goods option in the EU tab) in entry lines

With regards to transactions with NI businesses, due to its special dual position, VAT numbers will have an XI prefix (instead of GB).

While entering sales orders and sales invoices, EGN will check whether the line item is required for VAT reporting or not. If it is, there will be a pop up requesting for VAT-related data to be included, if it is not already available.

As an enhancement, EGN will check the origin and destination country codes as well as VAT number prefix, if any (especially for XI prefix), when tabbing through a line item. The following will apply:

  • Between GB and NI with XI prefix, there will NOT be a pop up for more Intrastat data.
  • Between NI and GB with XI prefix, there will NOT be a pop up for more Intrastat data.
  • Between EU member country and GB with XI prefix, there WILL be a pop up for more Intrastat data.
  • Between EU member country and GB without XI prefix, there will NOT be a pop up for more Intrastat data.
  • Between GB and EU without XI prefix, there will NOT be a pop up for more Intrastat data.
  • Between EU and NI with or without XI prefix, there WILL be a pop up for more Intrastat data.

This is assuming GB country code is configured as NOT an EU member country while XI country code is configured as one.

How Exact Globe Next records EU sales list

The EU sales list will be referred to while recording Intrastat transactions. To cater to NI's dual position, the following updates to EU sales list have been implemented:

  • Transactions between GB and NI will be listed if the VAT number has an XI prefix.
  • Transactions between NI and other EU countries will be listed whether the VAT number has an XI prefix or no prefix at all.
  • Transactions within NI will be listed (especially if VAT number has an XI prefix).
  • Transactions between NI and non-EU countries will be listed if the VAT number has an XI prefix.

To effect the above changes, the EU sales list report logic has been updated:

  • Changes applied in the sales entry (financial) screen for transactions involving the following legislations:
    • Czech (Czech Republic)
    • Dutch (Netherlands)
    • French (France)
    • Italian (Italy)
    • Slovak (Slovakia)
    • Spanish (Spain)

    For the above legislations, no changes have been done to the sales invoice (logistic) logic. Existing functionality in the EU sales list report already includes transactions generated from the sales invoice (logistic) for a debtor with the VAT XI prefix.

  • Changes applied to sales entry (financial) and sales invoice (logistic) involving the German legislation.
  • No changes have been made to the EU Sales list report logic for the following legislations as existing functionality already includes transactions for debtors with the VAT XI prefix:
    • Austrian (Austria)
    • Belgian (Belgium)
    • Luxembourg

     
 Main Category: Attachments & notes  Document Type: Release notes detail
 Category:  Security  level: All - 0
 Sub category:  Document ID: 29.943.822
 Assortment: Exact Globe  Date: 03-03-2021
 Release: 422  Attachment:
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