At present, businesses that need to claim a VAT refund from another EU member state can do so using HMRC’s online VAT services.
As the UK government pushes ahead with its plan of exiting the EU on 31 January 2020, the current process of claiming VAT refunds is due to change at 5pm on the same day. Whilst businesses will no longer be able to claim using this method, they will still be able to view any previous claims made.
HMRC guidance titled “Claim VAT refunds from EU countries after Brexit” advises that post-Brexit, any refund claims will need to be made using the same process that businesses based outside the EU use (even where the claim is for expenses incurred before Brexit).
The 31 January deadline is therefore NOT the date by which claims must be made for any EU VAT incurred in 2019, but from this date onwards, any such claims cannot be made via the HMRC online portal.
Why is the system changing?
Due to Brexit, the UK will no longer have access to the EU VAT refund system and will have to use the process currently used by non-EU businesses. This process varies across the EU and UK businesses need to become aware of the processes in each EU country where they incur costs and want to claim a refund of VAT. Many of these processes require paper returns and must be filed by a local representative and are thus likely to add both costs and delays compared to the current system.
An example of this is the guidance set out below for reclaims in relation to costs incurred in France.
Non-EU businesses (13th Directive)
Non-EU businesses may request a VAT refund under the 13th Directive provided eligibility conditions are met. Non-EU businesses must appoint a French VAT representative to file a refund claim under the 13th VAT Directive. The claim must be made in hard copy (i.e. applications cannot be filed electronically and original invoices and import documents must be provided).
Below you will find a link to the EU commission’s webpage which has the rules for each EU member state:
If you require any more information or would like to discuss your VAT position in further detail, please contact our VAT specialist Steven Cosgrove using the details below.