Who is impacted?
Many businesses operating in countries that they are not established or VAT-registered can incur significant amounts of VAT on expenses paid in those countries and can be entitled to recover some or all of the VAT incurred, thus reducing their costs.
Examples where businesses may incur overseas EU VAT include travel related costs (including on overseas EU hotel costs, conferences, events, exhibitions etc), land-related services, tooling charges and the domestic supply of goods where businesses are unable to obtain a local VAT number due to the extended reverse charge.
Therefore, certain industries such as the pharmaceutical and entertainment sectors will be particularly impacted by any change in claiming EU VAT refunds.
“As such, we are recommending that clients should submit all EU VAT claims for 2018 before 29 March 2019 if possible,” says Nicola Gladwell, VAT Consultant at Rouse Partners.
Am I eligible to make a claim?
You can make a VAT reclaim from any EU country, provided:
- You are not VAT-registered in that EU country and don’t have to be or can’t be registered there
- You don’t have another residence or place of business there
- You don’t make any supplies there (with the exception of transport services for the international carriage of goods where the person you’re supplying pays VAT on them)
How do I submit my EU VAT refund claim?
Refund claims can currently be submitted in the usual manner before the 29 March 2019 via the on-line HMRC portal.
What happens if I miss the deadline for making a EU VAT refund claim?
If this deadline is missed, then claims will need to be made via the more restrictive paper based VAT refund regime applicable to non-EU based businesses. As the regime has different deadlines, it is unclear if the period 1 January to 30 June 2018 would be refunded if the 29 March 2019 deadline were missed.
Furthermore, there are currently rumours circulating that France and Luxembourg will reject claims made by UK businesses via the portal if they are not made before end of February 2019 (these remain rumours at present).
Therefore, we strongly recommend that businesses submit their claims for 2018 as soon as possible. Subsequent claims for 2019 cannot be made via the on-line portal if the UK leaves the EU on 29 March without a deal. These 2019 claims will need to be made in these circumstances via the paper-based VAT refund regime, as discussed above.