How to reclaim VAT incurred in other EU states

Where a business incurs VAT on expenditure in an EU member state where it is not established, it can recover the VAT directly from that member state (the member state of refund). The previous system, known as the 8th VAT Directive refund system, was a lengthy, burdensome, paper-based system which has been replaced with a new system which applies to all claims submitted on or after 1 January 2010.

Requests for refunds will continue to be dealt with by the member state of refund, in accordance with whose rules the repayment will be computed.  The repayment will be made directly to the business under the new system, which is an electronic one, with specified timescales and interest payable if these are not met.

The electronic claims will be completed and submitted via the competent authorities in the member state in which the claimant is established (the member state of establishment).  The applicant must be a taxable person established in a member state other than the member state of refund and must meet the following conditions:  

  • The applicant must not be registered, liable or eligible to be registered in the member state from which they are claiming the refund.
  • The applicant must have no fixed establishment, seat of economic activity, place of business or other residence there.
  • During the refund period the applicant must not, in general terms, have supplied any goods or services in the member state of refund (there are exceptions).

Basic registration checks will be carried out by the member state of establishment before the application is forwarded electronically to the member state from which the refund is being claimed.  The member state of establishment will not forward the application to the member state of refund where during the period of refund any of the following apply: 

  • The applicant is not a taxable person for VAT purposes.
  • The applicant makes only exempt supplies.
  • The applicant is covered by the exemption for small enterprises.
  • The applicant is operating the flat–rate scheme for farmers.