Is business in Europe costing you 20% more than it could?
Many businesses that are registered for VAT in one member state of the EC also incur costs for goods or services in other member states. They are therefore obliged to pay foreign VAT, for example, on fuel costs or when taking part in trade fairs. This expenditure may be greater then it needs to be if, for some reason, they fail to recover the foreign VAT that they have paid and, with VAT rates in some countries in excess of 20%, this can be substantial. So how do you go about getting this money back?
Firstly, do not attempt to include this VAT on your normal UK monthly or quarterly VAT return.
Make separate quarterly or annual claims to the VAT repayment units of each of the relevant countries. The claims must be submitted in the language specified by the tax authorities of those countries, and the first claim must be supported by a Certificate of Status of Taxable Person, or VAT 66, which can be obtained from your VAT office.
There is a minimum value of tax that you can aim to recover on any one quarterly claim, although you can recover smaller amounts on an annual basis. Each country has different thresholds. In France, for example, it is 1400FF per quarter.
All claims must be supported by original invoices. These will be returned to you after your claim has been processed and the funds repaid.
The majority of companies employ a VAT recovery agent to handle all the paperwork for them. If you choose to do this you will be required to sign Powers of Attorney and these agents will provide you with all the necessary documentation. Your agent will then handle every aspect of the process for you and refund the foreign VAT to you, net of their fee.