VAT news

Don’t forget to claim your foreign VAT in time

Gareth Bevan 11 August 2017 No comments

Do you incur overseas VAT in the course of your business activities?  Did you know that not all foreign VAT you pay needs to be suffered as a cost?  There are mechanisms in place which enable both EU and non-EU businesses to recover VAT on certain costs that are incurred in EU countries where they are not VAT registered and not established.

What can be recovered?

There are conditions which must be met in order to be able to make a claim and not all VAT can be recovered, e.g. VAT on entertainment costs.  Typically the following types of business-related costs are recoverable though:

  • accommodation and meals,
  • admissions to trade fairs and exhibitions,
  • travel costs,
  • 50% of the VAT charged for hiring or leasing a car,
  • local purchase of goods.

EU electronic cross-border refund system

EU businesses can claim refunds of foreign VAT incurred in all other EU countries electronically via their home tax authority portal. The refund applications can relate to a periods from 3 months up to a calendar year and must be submitted by 30 September of the following year.

Non-EU businesses refund process

Non-EU businesses are also able to recover foreign VAT incurred within the EU via the paper-based 13th Directive VAT refund process.  There are certain requirements that must be met for a claim to be valid and the expenditure on which VAT can be reclaimed varies from EU Member State to Member State.

Under the 13th Directive VAT refund process details such as administrative arrangements, conditions for submitting claims, time limits and claim periods etc., are left up to the individual Member States.  In the UK, refund claims for non-EU businesses are based on a “prescribed year” running from 1 July to 30 June. The deadline for submission of annual claims in the UK is six months after the end of the prescribed year, i.e. 31 December.

Snooze and you lose!

Now is a good time to start working on your foreign VAT refunds to ensure you meet the relevant deadlines.  The average EU VAT rate is now over 20% so don’t miss out on the opportunity to reduce your overseas VAT costs where possible!

For further information on making VAT refund claims see HMRC’s Notice 723A.

We can process foreign VAT claims on your behalf so please get in touch if you are interested in this service or if you require assistance with making your own claims.