During the plenary session on Wednesday 11 November, MEPs gave the green light, by 641 votes in favour, 17 against and 27 abstentions, to new rules for the identification of taxable persons for value added tax (VAT) purposes in Northern Ireland after Brexit.
From 31 December 2020, EU VAT legislation will cease to apply to the United Kingdom. However, based on the Protocol on Ireland and Northern Ireland, EU VAT legislation will continue to apply to Northern Ireland with regards to goods in order to avoid a hard border between Ireland and Northern Ireland. On the other hand, as far as services are concerned, Northern Ireland, like the rest of the UK, will be considered to be outside of the EU.
The new rules proposed by the European Commission in August amend the VAT Directive to introduce VAT identification numbers in Northern Ireland with a specific prefix to distinguish between taxable persons and non-taxable legal entities whose transactions involving goods in Northern Ireland are subject to EU VAT legislation and those carrying out other transactions for which they are identified for VAT purposes in the United Kingdom.
With regard to taxation, the European Parliament is only consulted. The Council of the EU has already voted in favour of the new rules at the end of September. Read the adopted text: https://bit.ly/3kquPLA (Original version in French by Marion Fontana)