How to reclaim VAT on business expenses in the EU?

How do you reclaim VAT on EU purchases from 1 January 2021?

This is a freeview 'At a glance' guide to reclaiming VAT on business expenses in the EU.

How to reclaim VAT on purchases abroad: refunds of VAT incurred by UK businesses in the EU from 1 January 2021. 

Under the Thirteenth VAT Directive (86/560/EEC) UK businesses that incur VAT in EU countries are able to claim refunds of that VAT from the relevant member state.

• Since 1 April 2021, UK registered businesses have not had access to the EU electronic portal unless they are registered in Northern Ireland.  
  • EU VAT claims must now be made using the previously existing process for non-EU businesses.
  • This process varies across the EU. It is necessary to follow the procedure set out by the country to which the claim relates. 
• Member states have their own special requirements: details can be obtained from the relevant tax authority.

• It may be necessary to provide a certificate of status when making a claim. This can be obtained from HMRC.  

Am I eligible to make a claim?

A UK business can make a VAT claim from an EU country if the business:

• Is not based in any EU country or territory.
• Does not make any supplies in the country where the VAT was incurred unless the supplies are:
  
  • Exempted transport and ancillary services.
  • Supplies to customers liable for payment of the related VAT under the reverse-charge mechanism.

Country-specific conditions

Each EU country may: 

• Refuse to refund VAT under the procedure if the UK does not grant reciprocal refund rights for VAT to businesses based in that EU country.
• Restrict the type of expenditure qualifying for VAT refunds.
• Require the claimant to appoint a tax representative.

Useful guides on this topic

Importing goods into GB from 1 January 2021
The post Brexit transition period ended on 31 December 2020. HMRC has issued guidance for importing goods. 

Place of supply: Goods
The place of supply (POS) of goods determines whether the supply is within the scope of UK VAT and whether VAT is payable on that supply.

Place of supply: Services
The place of supply (POS) of a service determines whether the supply is within the scope of UK VAT and whether VAT is payable on that supply.

EU VAT e-commerce package: From 1 July 2021
On 1 July 2021 a number of European Union (EU) VAT changes took effect, including the introduction of two new One Stop Shops. What are the changes? Who is affected? 

External links

HMRC: 

• Refunds of UK VAT for non-UK businesses or EU VAT for UK businesses (Notice 723A)
• How to claim a refund of VAT paid in an EU member state
• Get confirmation from HMRC that you are trading in the UK

European Commission: 

• VAT refunds
• Legislation relating to the EU VAT refund procedure
• Thirteenth Council Directive