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Welcome to the European Tax Blog.

Some of Europe's brightest legal minds look at the tax issues across Europe which could impact multinational businesses.

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Northern Ireland Protocol: agreement in principle

The co-chairs of the EU-UK Joint Committee stated that, following their meeting on 8 December 2020, agreement in principle had been reached on the outstanding issues in relation to the implementation of the Withdrawal Agreement and the Northern Ireland Protocol, and that the "UK will withdraw clauses 44, 45 and 47 of the UK Internal Market Bill, and not introduce any similar provisions in the Taxation [(Post-Transition Period)] Bill."

The joint statement notes that agreement in principle has been reached on, inter alia, the practical arrangement for an EU presence in Northern Ireland (NI) in respect of check and controls under the protocol and the criteria for determining when goods moving from Great Britain (GB) to NI can be considered "not at risk" of entering the EU. In respect of such goods, the Protocol provides that no customs duties shall be payable on their transfer from GB to NI, reflecting that the UK, including NI, forms one customs territory.

Draft texts to give effect to the points that have been agreed in principle is to be prepared for adoption during the fifth regular meeting of the EU-UK Joint Committee.

XI VAT numbers for Northern Ireland

In other recent developments, following the amendment of the Principal VAT Directive to require the prefix "XI" for Northern Irish VAT numbers, UK guidance has been updated to state that, if "you plan to move goods between Northern Ireland and non-EU countries (including GB), you’ll need an EORI number that starts with XI". Further guidance confirms that HMRC will automatically send such numbers to any business they consider would need one, including any business which signed up for the Trader Support Service.

Taxation (Post-transition Period) Bill

The Taxation Bill referred to in the statement issued by the EU-UK Joint Committee was introduced in the House of Commons, the lower chamber of the UK's Parliament, on 8 December 2020, and includes certain measures in respect of the implementation of the Northern Ireland Protocol.

Clause 1 and 2 of the Bill would respectively insert new sections 40A and 40B, and sections 30A to 30C into the Taxation (Cross-border Trade) Act 2018.

Under new section 40A, customs duty would be charged on the GB to NI movement of non-domestic goods or goods "at risk of subsequently being moved into the European Union", with that term to be defined in Treasury regulations based on the texts to be agreed by the EU-UK Joint Committee.

New sections 30A to 30C would provide that EU goods entering Northern Ireland are not subject to customs duty, that other non-UK goods entering Northern Ireland are subject to customs duty under the EU customs code and that customs duty is also charged on the NI to GB movement of goods, other than “qualifying Northern Ireland goods”, with that term to be defined in Treasury regulations. It seems likely that regulations made on 4 December 2020 which define the term “qualifying Northern Ireland goods” for the purposes of the European Union (Withdrawal) Act 2018 would give a good indication of how the term would be defined for these purposes.

The bill would also insert a new section 40A and Schedules 9ZA and 9ZB into the Value Added Tax Act 1994 to govern the VAT treatment of the movement of goods between NI and the EU and between NI and GB.


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