Due to the end of the transition period after Brexit, the EU VAT refund procedure will no longer apply to English VAT. You can reclaim English VAT incurred in 2020 only until 31 March 2021! Normally the deadline for EU refunds is 1 October. So take timely action!
EU VAT refund procedure
The EU VAT refund procedure is designed for the situation where an EU-based entrepreneur incurs VAT from another Member State. An Austrian employee refuels during a business trip along the Autostrada and is handed a fuel receipt with Italian VAT. Or a Greek entrepreneur purchases goods in the Netherlands and incurs Dutch VAT, but does not owe VAT in the Netherlands himself.
The VAT incurred on the costs may be (partly) recoverable. The EU VAT refund request (formerly ‘Eighth Directive’) is more or less harmonized and can be submitted via the ‘portal’.
Refunds and UK
The EU VAT refund procedure naturally also applied to English entrepreneurs who wanted to reclaim VAT in the EU and vice versa. Now the EU refund procedure is coming to an end for those cases.
How should refund requests be handled in the current period? Foreign VAT may still have been incurred up to the end of 2020, but from the beginning of 2021 the UK will be regarded as non-EU and the applicability of the procedure will no longer be obvious. Certain transition periods have been created for this purpose.
Deadlines for EU refund requests
If an EU entrepreneur incurred English VAT in 2020, this can still be reclaimed through the portal until March 31, 2021. English VAT paid in 2021 must be reclaimed via the ‘VAT 65A’ form. This refund scheme is not based on any European directive.
English entrepreneurs can also still reclaim EU VAT paid in 2020 through the portal. They too must submit their request by 31 March 2021. After that they will have to rely on the ‘Thirteenth Directive request’. This type of request is submitted on paper and many EU Member States only grant a refund if the condition of ‘reciprocity’ is met.
To avoid EU VAT and/or UK VAT not being refunded, we advise you to submit any refund claims by 31 March 2021. If you like to discuss with one of our VAT advisors , please feel free to contact Joyce Westerveld – RED Tax Specialists.