The Brexit impact on European VAT Recovery

When the agreed Brexit transition period between the UK and Europe comes to an end on the 31st December 2020, the UK will no longer form any part of the EU tax regime, unless in the very unlikely event that both sides decide and agree to extend the transition period.

Currently, EU Directive 2008/09/EC (formerly the 8th Directive) allows EU businesses to claim refunds of VAT incurred in other Member States through a coordinated electronic platform. UK businesses will not be able to use the EU VAT refund system to claim refunds of VAT on expenses incurred in any EU member state on or after 1 January 2021.

What happens after the 31st December 2020?

After this date, UK companies will have to revert and follow the procedure provided under the Thirteenth VAT Directive (86/560/EEC) to request refunds of VAT paid in a EU Member State. This applies to VAT paid on or after 1 January 2021 on any VAT Recoverable goods in each member state.

How does the process change?

Hard copies of original invoices and documentation will need to be sent to each ministry, where the process can vary across the EU and businesses will need to make themselves aware of the processes in the individual countries where they incur costs and wish to claim a refund. Claim forms will normally always be done in the language of the local country and any disputes or appeals will also have to be handled in the local language.

The deadline for submitting a claim differs by country and some countries will require UK businesses to appoint an agent or fiscal representative. Additionally, several EU Member States will require reciprocal agreements to be put in place to allow applications to be made.

Vrio – By your side

At Vrio, our experienced multi-lingual team are fully prepared to support all customers with the migration from the 8th VAT Directive to the 13th VAT Directive. Vrio system have already been updated in preparation for the switch.

Vrio makes the transition seamless, preparing all relevant country documentation to ensure that your claims continue to be presented and paid as efficiently as possible, leaving you and your team to focus on your business operations.

Doubts or questions?

Contact our Tax Recovery specialist Michelle Sherry who will guide you through the transition and ensure that you have everything established in preparation for the new system. Michelle is available to answer any doubts or questions that you have, call Michelle at your local Vrio office today on 0845 313 2212 for more information.