I am a UK VAT registered business: how do I reclaim VAT on expenses incurred in Europe?
How to reclaim VAT on purchases abroad: refunds of VAT in the European Community for EC and non-EC businesses.
Under the Thirteenth VAT Directive (86/560/EEC) UK businesses visiting other EC countries are able to claim VAT refunds on VAT incurred in those countries.
- For a UK registered business the application is made online, via HMRC’s VAT services (log in to HMRC/the Government Gateway, go to VAT services and scroll down to see VAT EU refunds).
- If the business has an agent, the agent is required to obtain authorisation (go online) for their client and then it may access the service.
- A separate online application is required for each Member State in which a claim is to be made.
- The refund period must not exceed one calendar year or be less than three calendar months unless the period covered represents the remainder of a calendar year following submission of an application which covers the earlier part of the year.
- Claims must be made by 30 September following the calendar year that the VAT is charged.
- Member States have their own special requirements; details can be obtained from the relevant tax authority.
Minimum claim level:
- €400 euro if a claim covers a period of more than three months but less than a year
- €50 euro if a claim covers a whole year or the remainder of a year (ie where a claim covers the whole period between the end of a prior claim and the end of the year)
Am I eligible to make a claim?
You can make a claim from an EU country if:
- You’re not VAT-registered in that EU country and don’t have to be or can’t be registered there
- You don’t have a place of business or other residence there
- You don’t make any supplies there, unless
- They’re transport services for the international carriage of goods
- The person you’re supplying pays VAT on them
What can I claim?
A business can claim VAT on goods and services purchased during the refund period, and VAT on goods imported into the UK during the refund period.
No claim is allowed for VAT:
- That has been incorrectly invoiced, or where VAT has been charged on the dispatch of goods to another member state, or the export of goods outside the EU.
- On the purchase of a motor car
- On goods and services used for business entertainment. As an exception, VAT on entertainment for overseas customers may be reclaimed but only if it is of a very basic nature.
- On goods and services used for non-business activities.
Only 50% of the total VAT charged may be claimed on hiring or leasing a motor car.
The nature of the goods and services acquired have to be described according to the following expenditure codes.
2. Hiring of means of transport.
3. Expenditure relating to means of transport.
4. Road tolls and road user charge.
5. Travel expenses, such as taxi fares, public transport fares.
7. Food, drink and restaurant services.
8. Admissions to fairs and exhibitions.
9. Expenditure on luxuries, amusements and entertainment.
Many Member States will require sub-codes in addition to the main codes set out above, and where applicable, these sub-codes will appear as completion options on the electronic portal. Where code 10 is used, without an accompanying sub-code, a narrative description of the goods or services must be entered in a free text box, using the language(s) required by the Member State of Refund.
If an invoice includes items covering more than one expenditure code the code relating to the highest proportion of expenditure is the one that should be used.
Currency of EU VAT Refund claims
All invoices entered on EU VAT Refund claims must be expressed in the currency of the Member State of Refund or the claim will be rejected by that Member State. If a claim is to a Member State where the Euro is not the national currency and a business has invoices that are in Euros they must be converted. The exchange rate used should be as on the date of the invoice as provided by the European Central Bank (ECB).