UK businesses have been able to claim back refunds of certain VAT incurred in other EU countries. VAT incurred in other EU jurisdictions is not deductible input tax on the UK VAT Return. EU VAT would otherwise be irrecoverable (unless the UK business was also VAT registered in those EU jurisdictions concerned).
If the UK exits the EU without a deal, or any form of transitional arrangement in place, the reclaim facility will become far more laborious.
If you are a VAT registered business that incurs VAT in other EU countries where reverse charging does not apply, the current VAT online refund facility enables the UK business to file claims in each jurisdiction in which VAT has been incurred, which is not below certain de minimis limits, in order to claim that VAT back. This is useful where:
- the UK business is not VAT registered in the European jurisdiction in which VAT is incurred
- the UK business has no place of business or establishment there and makes no supplies within that jurisdiction.
It was mentioned above that each jurisdiction will have a minimum amount which can be claimed. The UK business also has to be mindful of its mix of taxable and exempt supplies, which will affect recovery, and any rules specific to the jurisdiction concerned. Goods and services brought into the UK from the EU as components in a manufacturing process or for direct resale, are not covered by the refund scheme. These are dealt with via the reverse charging provisions.
Claims are normally made by reference to a calendar year (in which case the minimum VAT claim is €50) but can be for shorter periods of between three months and less than a year (in which case the minimum VAT claim is €400).
The deadline for making a claim for EU VAT incurred during 2018 is 30 September 2019.
Ensure any claim for that year is submitted, using the current online claim system, as soon as possible.
Should the UK exit the EU on 31 October, with or without a deal, it may be sensible to make a claim for the first nine months of 2019 before the 31 October. If no deal is struck at the time of exit, the electronic claim system available now will come to an end and UK businesses will only be able to make future claims using the same paper claim procedures that non-EU businesses must rely upon. These are laborious, slow and less reliable.
The electronic claim process requires that you, or your agent, are registered to use the service. HSKS Greenhalgh can assist you in this regard. Please contact us if we can assist.