Creating EU Acquisitions VAT Rates

If you have selected HMRC as your VAT authority , then you can create an EU acquisitions VAT rate which uses the EU acquisitions (purchase of goods from the EU) VAT treatment.

EU acquisitions (purchase of goods from the EU) – EU acquisition tax is the purchase of goods from another company where both parties are VAT registered. This relates to the purchase side of your accounts. HMRC details the rules in their guidance document The single market (VAT Notice 725) (external link). This affects:

• Box 7 (the total value of purchases and all other inputs excluding any VAT);
• Box 9 (total value of all acquisitions of goods and related costs, excluding VAT: a) from EU Member States made on or before 31 December 2020 & b) from EU Member States to Northern Ireland made from 1st January 2021)
• Box 2 (VAT due in the period on acquisitions of goods made in Northern Ireland from EU Member States), and
• Box 4 (VAT reclaimed in the period on purchases and other inputs (including acquisitions in Northern Ireland from EU member states)).

Note: This treatment relates to goods, not services.

As they are an additional feature of VAT codes, VAT treatments apply at line level.

To create an EU Acquisitions (standard) VAT rate:

1. On the Set-up menu, click VAT. The VAT Rates window opens.
2. Click in the line above the grid to create a new VAT rate. Enter the following:
   • Rate – SG
   • Name – EU Acquisitions (standard)
   • Percentage – 0
   • Inclusive – clear
   • Used – select
   • VAT treatment – EU acquisitions (purchase of goods from the EU).
   • Treatment rate – 20.
3. A message, "Please verify you need to use this functionality as it only relates to EU trading and Northern Ireland," is displayed. If you are not sure if you need to use this VAT treatment, please contact your accountant or HMRC.
4. Click Confirm.

To create an EU Acquisitions (zero rated) VAT rate:

1. On the Set-up menu, click VAT. The VAT Rates window opens.
2. Click in the line above the grid to create a new VAT rate. Enter the following:
   • Rate – ZG
   • Name – EU Acquisitions (zero rated)
   • Percentage – 0
   • Inclusive – clear
   • Used – select
   • VAT treatment – EU acquisitions (purchase of goods from the EU).
   • Treatment rate – 0.
3. A message, "Please verify you need to use this functionality as it only relates to EU trading and Northern Ireland," is displayed. If you are not sure if you need to use this VAT treatment, please contact your accountant or HMRC.
4. Click Confirm.

To create an EU Acquisitions (standard inclusive) VAT rate:

1. On the Set-up menu, click VAT. The VAT Rates window opens.
2. Click in the line above the grid to create a new VAT rate. Enter the following:
   • Rate – IG
   • Name – EU Acquisitions (standard inclusive)
   • Percentage – 0
   • Inclusive – select
   • Used – select
   • VAT treatment – EU acquisitions (purchase of goods from the EU).
   • Treatment rate – 20.
3. A message, "Please verify you need to use this functionality as it only relates to EU trading and Northern Ireland," is displayed. If you are not sure if you need to use this VAT treatment, please contact your accountant or HMRC.
4. Click Confirm.

See Also