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28th February, 2023
On the 27th February 2023, the European Commission and the Government of the United Kingdom reached a political agreement regarding the Windsor Framework.
What is the Protocol on Ireland/Northern Ireland?
The Protocol on Ireland/Northern Ireland, as an integral part of the Withdrawal Agreement, was agreed jointly and ratified by both the EU and the UK. It has been in force since 1 February 2020 and has legal effects under international law. The aim of the Protocol is to protect the Good Friday (Belfast) Agreement in all its dimensions, maintaining peace and stability in Northern Ireland, avoiding a hard border on the island of Ireland, while preserving the integrity of the EU Single Market.
What is the Windsor Framework agreement?
The agreement constitutes a comprehensive set of joint solutions aimed at addressing, in a definitive way, the practical challenges faced by citizens and businesses in Northern Ireland, providing them with lasting certainty and predictability.
The joint solutions cover, amongst other things new arrangements on customs, agri-food, medicines, VAT and excise, and are based on the following starting points:
• A comprehensive, cross-cutting and definitive solution, addressing practical difficulties in the operation of the Protocol;
• A balance between flexibilities for the movement of goods for end use in Northern Ireland and effective safeguards guaranteeing the protection of the EU's Single Market;
• A clear distinction between goods at risk and goods not at risk of entering the EU's Single Market.
How does the Windsor Framework affect Customs procedures?
New arrangements in the area of customs are based on an expanded trusted trader scheme that will also be open to businesses in Great Britain. Goods moved by trusted traders and not at risk of entering the EU's Single Market will benefit from dramatically simplified procedures and drastically simplified declarations with reduced data requirements. Substantial facilitations were found for freight and the movement of all types of parcels, i.e., business-to-business, business-to-consumer, and consumer-to-consumer, with consumer-to-consumer parcels being entirely exempt from the main customs requirements.
These new solutions are made possible especially by new data-sharing arrangements allowing for risk assessments, which would constitute the principle basis for controls. Robust authorisation and monitoring of the trusted trader scheme, and increased market surveillance and enforcement by UK authorities also act as safeguards. Full customs procedures will apply to goods at risk of entering the EU's Single Market.
How does the Windsor Framework affect VAT and Excise?
New flexibilities were also found for certain VAT and excise rules, accompanied by safeguards protecting the EU from fraud risks or potential distortion of competition. These arrangements include a possibility to set UK VAT rates below EU VAT minima rates for immovable goods with no risk that these goods enter the EU Single Market (e.g., a heat pump for a house). A UK SME VAT exemption scheme is now applicable to both goods and services if the UK respects the EU threshold for the size of SMEs. There is now also a possibility to tax all alcoholic beverages according to their alcoholic strength, and to set reduced duty rates to alcoholic beverages, if served for immediate consumption in hospitality venues in Northern Ireland, as long as the applied rates are not below EU minima duty rates.
These new arrangements are underpinned by robust safeguards to ensure the integrity of the EU’s Single Market, to which Northern Ireland has a unique access.
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Additional information can be viewed on the European Commission official page.
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