Monthly Archives: October 2014

Claiming VAT back on business expenses in the E.U

How to claim VAT back from business expenses acquired in the E.U. 

Read on if you want free money…

The Trevi Fountain - to match blog content claiming V-A-T on business expenses whilst travelling

Do you want your VAT back?

…If you often travel into Europe on business and your business is VAT registered, you may be able to claim EU VAT back on things like your hotel bill, subsistence, travel (if VAT is charged in the first place), events you have attended and all sorts of other things.

VAT reclaim on E.U business expenses. 

For getting your VAT back  there is a reclaim process that you can use after the end of a calender year whereby you collect all your eligible receipts, add them up, and if greater than €50, make the claim back VAT via the relevant  HMRC website. 

The Rules for claiming back V.A.T on your business expenses in E.U Member states…

  • You cannot be VAT registered in the country you wish to make to a VAT refund from;
  • To claim V.A.T back you can’t  have a place of business or a residence in that country;
  • The expenses incurred were in the course of business and not pleasure;
  • You don’t make any taxable supplies in that country (a couple of exceptions to that);
  • To claim back V.A.T for the expenses you have made whilst on business in the E.U you must be in business and be VAT registered.

You can only apply for a VAT refund once the cost is over 3 months old, and must not be over 12 months old. 

The refund period for claiming back Value Added Tax is based on a calender year, and there is also a minimum amount you can request to be refunded.

Although the amounts can vary per country, the standard amounts used are based on when you are applying for a refund of V.A.T

  • €400 minimum if you start to make the claim during the calender year;
  • €50 minimum if your claim is for a whole calender year.

This encourages you to make one refund of Value Added Tax claim once  the calender year has ended. €50 worth of VAT can quickly mount up. For example, a 2 night stay in a 4* hotel in Copenhagen costs around DKK1700.  With VAT at 25%, that is about €45 of VAT. A bit of subsistence, car rental or conference cost (transportation is not allowable for Denmark) and you are over that minimum €50 level.

Each country is different in what you can claim. Denmark allows the VAT on accommodation to be refundable, but Belgium, Greece, Ireland, Italy, Norway & Portugal don’t allow that VAT to be recovered.

There is a table buried deeply on the internet that shows what can be claimed for in each country, but if you are unsure, then drop us a quick note.

How to claim back VAT for European Expenses.

In order to be able to make your EU VAT recovery reclaim, you need to login to your VAT portal. Instead of going for “Submit a new return”, click on “Services you can add …. Enrol for online services” and then register.

Once it is all confirmed, you can then press ahead with the reclaim process.

As the reclaim process is done on line, you normally don’t have to send copies of invoices/receipts with the request unless the claim is above a certain amount.

It is not a quick process. Once the claim has been submitted, you get a confirmation that the request has been received within 16 days.

You will get a decision on whether or not you will get a refund within 4 months.

They may ask for more information at this stage which much be provided within one month. If there are no hiccups, you should receive the refund within 4 months and 10 days.

Is there a deadline for recovering E.U VAT?

If you are going to save up your receipts and make one claim after the end of the calender year, then the claim must be done by the 30th September in the following year.

Please note that this is done by calender year and not UK tax year. I know, I can hear you saying “is it taxable?”.

Well, getting a reclaim reduces your costs, so you will have less costs to go against your income, which effectively make it taxable. If I can get €50 back and only have to pay €10 for it, i’d do it.

 So there you have it. A way to get a little bit of money back in your pocket, by claiming back VAT from your European business trip

Expenses for Home based businessess.

This subject seems to be one that many clients ask. Self employed people mainly base their work place at home, although work takes place at customer locations. This applies to many trades & professions from plumbers, accountants, chiropractors, computer technicians etc.

As you visit customer sites, it would be reasonable to be able to charge to your business the cost of getting to the customer locations. But, there is a little bit of an issue if when you walk in after being at customer locations and your trading activity stops as you get home.  If no work was done at home, it implies that home is not the true base of your business. You need to make sure that business happens in the home.

In order to claim costs to travel from home to a customer location, you need to keep records of what you do at home in relation to the business. The type of records would be:

  • A diary of time spent working on your business administration such as raising invoices, dealing with your bookkeeping, writing proposals and quotes, white papers, report and on-line educations, plus social media & marketing tasks;
  • The proposals & invoices that you do all have your home address as the business base;
  • Complete and accurate records of all the travel you do to the customer locations – be it mileage, public transport even air & boat fares;
  • If you have any insurance policies to cover your business, they would normally be addressed and registered to where the business is based, so this should be the home if that is where the business is based.

It is the same if you are a company, so in the ideal world, the registered office should be at the business base. However, this address is a matter of public record and once set up, will remain so.

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You probably all do this type of work at home but not think about it or record it.   Don’t be a monkey, keep records as you go along, as it is so much easier to justify the travel expenses from home.