Businesses must follow a new route to get VAT refund paid in EU countries
Following the UK’s departure from the EU on 31 January 2020 – and after a transition period of 11 months – there were changes in how businesses trade with EU member states from 1 January 2021.
As a result, businesses must follow a different route to get VAT refund paid in EU countries. From 1 April 2021 UK businesses no longer have access to the EU electronic portal. The deadline for claiming VAT incurred on expenses in the EU on or before 31 December 2020 was 31 March 2021.
Any VAT incurred in EU member states can be claimed via the following systems:
Who should use the EU VAT refund system?
The EU VAT refund system can be used to make a claim for a refund of VAT incurred in an EU member state if your business is established in Northern Ireland or you have an establishment in Northern Ireland and you make:
If you meet the conditions, you can use the system to claim back VAT on invoices for goods only. You will need to use 13th Directive process for everything else such as VAT on purchase of services or where you are not eligible to use the EU VAT refund system.
See HMRC updated VAT notice 723A for more detailed guidance.
Full guidance on how to get refund under the 13th Directive process is divided in two categories:
UK businesses which are not required to register for VAT in the European Union, and who have incurred VAT in connection with their activities in an EU country, are entitled to deduct that VAT.
This ‘deduction’ is made by means of a refund from the EU country where they paid the VAT.
Claimants must send an application to the national tax authorities in the EU country where they incurred the VAT – see VAT refunds - country guide.
Full rules and procedure to follow can be found in Directive 86/560/EEC
To qualify for a refund under this procedure (see Article 1 Directive 86/560/EEC), during the refund period a business must NOT have:
Additionally, you need to be aware of any EU country-specific conditions. Any EU country may:
EU retailers can provide a VAT refund for goods sold to non-EU tourists when exporting them. Specifically, this covers:
Tourists must meet the following conditions to be able to claim VAT refund:
More information can be found on VAT refunds for non-EU tourists.
ACCA technical factsheet – Cross-border VAT in 2020 and beyond
ACCA's Summary of VAT impacts