How to claim VAT on expenses incurred abroad

Since the UK have left the European Union, all of the VAT rules have changed. Now, EU MOSS is not available for us, and in most of the UK, we can't use European Union VAT return system anymore. What's left is registering with each country's national tax authority separately. That might be ok if you are importing or exporting regularly to or from a speciffic country, but what if you have incurred expenses while travelling throughout Europe for your business purposes (for example if you are a lorry driver or are travelling for a trade show - hopefully soon, covid-restriction-allowing)?

So can I just claim VAT I have incurred with my expenses abroad, within my VAT return?

No, you can not claim this VAT with your regular VAT return.

How can I get my VAT back then?

If your business is based in Northern Ireland, you can still use the EU VAT refund system. This is an electronic system, where the minimum refund applied for must be €400 per quarter or a minimum of €50 per year. The deadline for applying for a refund is 30th September following the refund year.

If your business is based anywhere else in the UK, you can not use the electronic EU VAT refund system. Instead, you should use the EU13th Directive process.

In this procedure, in order to receive the refund of the VAT you have been charged on the expenses that you have incurred in countries of the European Union, you must send the application directly to the national tax authority of the EU country in which you have incurred the expenses in (often in their national language).

To qualify for a refund under this procedure during the refund period you business must NOT have:

• been based in any EU country or territory or

• supplied goods or services in the country where they incurred the VAT – except:

  • exempted transport & ancillary services or

  • services to customers solely liable for payment of the related VAT under the reverse-charge mechanism.

Every EU country has got its own specific rules, regulations, and VAT refund process, which makes it quite complicated and costly to get your VAT refunded if you have been and incurred expenses in more than one EU country during your financial year.

After all, even though the UK has left the EU, there still is a way to get the VAT charged on your expenses back, although I would recommend comparing the cost of applying for a refund with the cost of the lost VAT, as the latter might be smaller.

Further reading:

HMRC article about claiming VAT on expenses incurred in EU countries:

https://www.gov.uk/government/publications/accounting-for-vat-on-goods-moving-between-great-britain-and-northern-ireland-from-1-january-2021/check-how-to-claim-a-refund-of-vat-paid-in-an-eu-member-state

European Commission's full EU VAT Refund system process:

https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/vat/traders/vat_refunds/legislation_vat_refund_procedure.pdf)

European Commission article on cross border VAT refunds:

https://ec.europa.eu/taxation_customs/business/vat/eu-vat-rules-topic/vat-refunds_en

Thirteenth Directive:

https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:31986L0560&qid=1425222205431&from=EN

EU country-specific cross border non-EU VAT refund information:

https://ec.europa.eu/taxation_customs/business/vat/eu-country-specific-information-vat_en