As A Business Are You Able To Reclaim VAT Paid To Other EU Countries?

Many small and medium businesses conduct a lot of work with other countries in the EU, whilst others rely heavily on these countries for resources and supplies required to conduct their daily operations. But can these companies reclaim this VAT that has been paid to other EU countries?

Thankfully HMRC have developed a HMRC VAT refund scheme that addresses all of the issues that enables small business owners to reclaim VAT paid on allowable expenses when visiting the EU for business purposes. Included within these allowable expenses are vehicle hire, overnight accommodation and admission to industry events.

How Does The VAT Refund Scheme Work?

Businesses which are VAT registered are able to use the VAT refund scheme to reclaim the VAT on all business expenses that have been incurred elsewhere in the EU. However, in order to qualify for the scheme, the British business must fulfil the following criteria:

• Make taxable supplies.
• The business must not be VAT registered in the other EU country or be required to register for VAT there.
• The business must not hold a place of business or residence in the other EU country.
• The business must not make any supplies in the other EU country. This excludes transport services which are intended for the transport of goods and where the business’s customer pay VAT on the supplies.

Once a business meets the above criteria, is VAT-registered and is able to meet the other qualifying requirements, then it is able to apply for a VAT refund for VAT paid in EU countries. This can be accomplished by signing into HRMC’s online VAT portal.

The deadline for applying for a VAT refund on VAT paid in other EU countries through the VAT portal is the 30th of September of the year which follows immediately after the business paid the VAT elsewhere in the EU. Despite the fact that this means the deadline could be over a year away, the claim cannot cover more than one calendar year. Additionally, claims cannot cover a period which is less than three months, except in cases where this is all that remains in the current calendar year.

There are a number of minimums in place on the VAT refund scheme, these include:

• Claims which cover a period greater than three months, but less than a calendar year, the minimum business owners can reclaim is 400 Euros.
• VAT amounts which have a total less than 50 Euros cannot be reclaimed at all.