As an entrepreneur you may do business with parties in one or more of the other Member States of the European Union. Take the costs of an overnight stay for a business trip to Germany, for example. You will naturally want to reclaim the VAT on the invoices you receive from this party/these parties. These invoices will indicate German VAT, which is reclaimed from the German tax authorities. That means you cannot deduct this German VAT on your Dutch VAT return. In this blog we provide you with more information about reclaiming foreign VAT and the latest point at which you can do so. It is possible that Brexit may also be a factor in your case.
Do you want to reclaim input tax in an EU country in which you do not have a VAT number? If so, you can submit a refund application to the Dutch tax authorities. They will pass on your application to the tax authorities in the EU country concerned.
Reclaiming input tax from another EU country is subject to a number of conditions:
- Your company is based in the Netherlands.
- You are not VAT registered in the Member State in which you want to submit a refund application.
- You use the goods and services purchased for business activities that are subject to VAT.
- You do not file VAT returns in the country from which you want to reclaim VAT.
- During the refund period you did not make use of the exemption scheme for small businesses.
- If you submit a refund application for a full calendar year, a threshold of € 50 must be exceeded.
- If you submit a refund application for more than one quarter, but less than a calendar year, a threshold of € 400 must be exceeded.
This specifically relates to situations in which you have received invoices that include foreign VAT. As far as purchased goods are concerned, in such cases you will often have purchased the goods while physically present in the EU country in question. If you are in Germany on a business trip, for example, and fill up with gas while you are there, the receipt will show German VAT, which you can reclaim via a refund application. We are not, therefore, talking here about goods that you order from another EU country from the Netherlands. After all, goods purchased remotely are treated as an intra-Community acquisition, which means Dutch VAT is payable. In principle, services are taxed in the country where the customer is located. Educational events, such as courses, however, are taxed in the country where the service is consumed. The VAT on such services therefore has to be reclaimed by means of a refund application.
VAT number in another Member State
Do you have a VAT number in the Member State from which you want to reclaim input tax, e.g. because you exceed the threshold for distance selling in that country? In that case you have to deduct the foreign VAT on the VAT return you file there.
Apply for a VAT refund for 2019 before October 1
You have until October 1, 2020 at the latest to submit a refund application for foreign VAT charged to you in 2019. Applications submitted after this date may no longer be accepted by the other EU country. Applying for the special login details you need is easy using the following (Dutch-language) form: ‘Aanvraag inloggegevens voor terugvragen btw uit Eu-landen’ (‘Application for login details to reclaim VAT from EU countries’). Bear in mind that it can take up to four weeks to receive these login details. You should therefore apply for them well before September 1, 2020.
Refund application for British VAT
If you receive invoices in 2020 that include British VAT, or you have already received such invoices, you must submit a refund application to the tax authorities by no later than March 31, 2021. This shorter period is a result of the Brexit agreement. The transition period for the United Kingdom ends on December 31, 2020 and the new arrangements will then enter into force. Ordinarily, such an application would have to be submitted by no later than October 1 of the calendar year following that in respect of which VAT is being reclaimed, but that has now changed due to Brexit. You should therefore keep this new deadline in mind.
Can we help you with the process of reclaiming foreign VAT? If you have any questions, please get in touch with one of your contacts at Visser & Visser Belastingadviseurs.