VEXP20400 - Basic principles: conditions for zero rating NI-EU removals

Goods removed from Northern Ireland to an EU Member State are normally liable to acquisition tax paid by the customer in that Member State. To avoid double taxation the law provides for the supplier to zero rate the supply, subject to various conditions. Article 138(1) of The Principal VAT Directive 2006/112/EC provides the legal basis for zero-rating intra-EU supplies of goods.
In the UK, the conditions are set out in Regulation 133F, VAT Regulations 1995. In simple terms, the goods must have been removed from Northern Ireland to a person who is VAT registered in an EU Member State.

133F(1) Subject to regulation 133G, where the Commissioners are satisfied that —

(a)a supply of goods by a taxable person involves their removal from Northern Ireland;

(b)the supply is to a person (“P”) who is registered for VAT in a member State and has provided the supplier with the VAT identification number issued to P by that member State,

(c)the goods have been removed to a member State, and

(d)the goods are not goods in relation to whose supply the taxable person has opted, pursuant to section 50A(2) of the Act, for VAT to be charged by reference to the profit margin on the supply,

the supply, subject to such conditions as they may impose, shall be zero-rated.

More detailed conditions are in section 4 of Notice 725 VAT on movements of goods between Northern Ireland and the EU and are that

  • the customer’s valid EU VAT number, including the 2-letter country prefix code, must be shown on the VAT sales invoice
  • the goods must be sent or transported out of Northern Ireland to a destination in an EU Member State and
  • valid commercial evidence showing the removal of the goods from the UK must be obtained within time limits.

In most cases the time limit for removing the goods and obtaining evidence of removal is three months from the time of supply. This is extended to six months for goods involved in processing or incorporation before removal. The time of supply for goods supplied to a VAT registered customer in an EU Member State is the earlier of either

  • the fifteenth day of the month following the one in which the goods are sent to the customer or the customer collects them, or
  • The date of issue of a VAT invoice.

The evidential requirements are explained in VEXP70000.

If a business fails to account for VAT when conditions for zero rating are not met, follow the assessment procedures described in VEXP90300.