Overseas VAT refunds - How do you recover VAT suffered when you are travelling abroad for work

If your business suffers local VAT (or a similar “Goods and Services tax”) on trips abroad, the overseas VAT is not reclaimable on your UK VAT return.

Instead, it may be possible to reclaim the local tax paid directly from the local tax authority. EU member states all have a refund scheme, but not all non-EU territories offer the same.

UK businesses who have no place of business within the EU, and who are not required to be registered in the EU country where it is being charged local VAT, should generally be able to submit (“13th Directive”) claims to the relevant tax authority to reclaim some local VAT on business expenditure. There is a slightly different mechanism for businesses who do have a presence in the EU, which is not covered in this article.

Making a claim is subject to conditions, including the following:

• Claim forms must normally be completed in that state’s local language,
• accompanied by original VAT invoices, a certificate of status issued by HMRC in the UK Get confirmation from HMRC that you are trading in the UK - GOV.UK (www.gov.uk),
• and must (normally) be submitted by 30 June of the following year.

Member states can impose restrictions on the type of expenditure that qualify for refunds, and in particular, may restrict VAT recovery on travel and subsistence costs or if sales are exempt from VAT.

EU states can also insist that claimants appoint a tax representative, i.e. a local agent who may be jointly and severally liable for any VAT due.

Rules vary. For example, it is our current understanding that the Australian Tax Office does not permit refund claims for GST incurred by non-established businesses that are not registered for GST in Australia. However, it may be possible to register for Australian GST, even if no supplies are made in Australia, to reclaim some local GST.

Clearly, if your business is undertaking a project overseas then you should be considering the VAT and other tax consequences generally, and recovery of VAT suffered on local expenditure is just part of this. For one off or ad hoc trips, the admin burden may outweigh the cost of the oversea’ s tax you are trying to recover.

You should consider whether your supplier is legally obliged to charge VAT to you, as an overseas business. Clearly, if VAT is not chargeable you don’t need to go through a process to reclaim it (and the Tax Authorities may disallow a claim for VAT that should not have been charged.)

In terms of available resources, some Tax Authorities, for example the Irish Revenue Commissioners, have a decent website in English. A list of National Tax websites (EU states only) can be found at National Tax Websites - European Commission (europa.eu)

Some of the Big4 firms produce country by country guides (although note the caveats therein about relying on them.)

Or you might want us to put you in touch, and liaise, with a local advisor from our Praxity network who can assist.