Clarification will be required on how certain aspects of the Protocol will operate from a VAT and Customs perspective and the finer details of how certain of the arrangements will work in practice remains to be finalised.
Broadly, however, the arrangements should allow for frictionless trade on the Island of Ireland. Northern Ireland should benefit from tariff free access to EU markets and also Great Britain but there will be some controls and possible tariffs on the movement of goods from Great Britain to Northern Ireland. It remains to be clarified what level of customs control measures may apply in respect of the movement of goods from Northern Ireland to Great Britain.
Northern Ireland will remain part of the UK VAT area but the EU VAT rules concerning goods will continue to apply in Northern Ireland.
The operational aspects of the arrangements will need to be worked out but we expect the current VAT treatment of sales of goods between Ireland and Northern Ireland should continue to apply.
The UK can, however, opt to apply reduced rates of VAT and exemptions that apply in Ireland to goods sold in Northern Ireland. How these optional measures could apply in practice in Northern Ireland remains to be clarified
Northern Ireland will remain part of the customs territory of the United Kingdom but EU Customs rules concerning goods shall apply in Northern Ireland.
Northern Ireland will also remain aligned to a limited set of rules related to the EU’s Single Market in order to avoid a hard border on the island of Ireland.
The terms of the revised Protocol mean an all-Ireland economy is preserved with no Tariffs, customs controls or border checks applied to the trade in goods between Ireland and Northern Ireland allowing for frictionless trade North/South.
There will be no requirement to file customs declarations to record the movement of goods between Ireland and Northern Ireland.
Sales of goods from Ireland to the Great Britain should be treated as exports with no Irish VAT chargeable.
The same rules should apply to the sale of goods from Great Britain to Ireland with no VAT chargeable.
Import VAT will arise on the importation of goods into Ireland from Great Britain. It remains to be confirmed if Ireland would still implement postponed VAT accounting on imports which is to be introduced in the event of a no deal Brexit. Postponed VAT accounting for imports would eliminate the VAT cash flow cost of imports resulting in a significant VAT cash flow benefit for traders.
A similar position will apply in respect of imports of goods into Great Britain from Ireland which will attract import VAT. As in Ireland it remains to be confirmed if postponed VAT accounting would be introduced in Great Britain which is planned to be introduced in a no deal scenario.
These VAT recording requirements will continue to apply to trade between Ireland and Great Britain even if a free trade agreement is reached.
Customs controls will apply to the movement of goods between Ireland and Great Britain when the transitional period expires.
After the end of the transitional period Customs Tariffs will apply to trade between Ireland and Great Britain unless relieved under a free trade agreement. A free trade agreement will only apply to goods of EU or UK origin. For example it would not remove potential tariffs on goods imported into Ireland from outside the EU which are subsequently sold on to customers in the UK.
Import and export declarations will need to be filed in respect of trade between Ireland and Great Britain after the transitional period including in a case where a free trade agreement is reached. A free trade agreement will not remove many of the obstacles to frictionless trade associated with Brexit such as customs paperwork and potential regulatory checks
If a free trade agreement is not reached at the end of the transitional period, it remains to be seen if the United Kingdom would replicate its no deal plans and as a temporary measure eliminate Tariffs on a wide range of products imported into the UK.
Again the operational aspects of the arrangements will need to be worked out but we expect that broadly the current VAT treatment of sales of goods between Northern Ireland and Great Britain should continue to apply.
As part of the UK Customs area there generally should be no tariffs on goods moving from NI to Great Britain, however, further clarification will be needed on whether the UK may implement any special rules for certain categories of goods movements to the UK. For example, goods originating from outside of Northern Ireland which are shipped to the UK via Northern Ireland.
Certain Customs filing formalities may apply in respect of the movement of goods from Northern Ireland to Great Britain.
EU Tariffs may apply to goods brought into Northern Ireland from Great Britain. The Tariffs will apply if there is a risk that the goods will subsequently be moved to the EU. If the goods are not at risk of movement to the EU then no tariffs should apply.
Goods will be at risk of subsequently being moved to the EU unless it can be established that:
(i)They will not be subject to commercial processing in Northern Ireland; and
(ii)The goods fulfil criteria to be established by a Joint Committee, made up of representatives of the United Kingdom and the EU.
If goods can be proven to stay in Northern Ireland, then there are measures to allow for a potential reimbursement of duties paid. The position will also depend on whether a free trade agreement is ratified between the UK and EU.
If the United Kingdom agrees a free trade agreement with another country it may be open for Northern Ireland to be part of that agreement.
Again the operational aspects of the arrangements will need to be worked out but we expect that broadly the current VAT treatment of sales of goods between Northern Ireland and the other EU 26 Member States should continue to apply.
As with trade between Ireland and Northern Ireland it is understood the current trading rules between Northern Ireland and the EU should continue with no tariffs and declarations required on trade between Northern Ireland and the rest of the EU.
Again the operational aspects of the arrangements will need to be worked out but broadly the same VAT treatment applying to imports of goods into Northern Ireland from third countries should continue to apply. There remains a question over whether postponed VAT accounting would be introduced into Northern Ireland for imports.
UK Tariffs will apply to the import of goods directly into Northern Ireland unless the goods are at risk of being subsequently moved to the EU in which case it is understood EU tariffs will apply. Again the position will also be influenced by whether a free trade agreement is ratified between the EU and UK.
NI-produced goods may have the same access under UK FTAs to other markets as GB-produced goods.
The protocol provides that no customs duties shall apply to personal property (e.g., household effects, private motor vehicles) of UK residents brought into Northern Ireland from Great Britain.
The protocol also confirms that no duties shall be payable on: