Brexit - VAT refund 2020

As you may know, businesses that incur local VAT on purchases in EU Member States in which they are not established, may make use of the EU VAT refund procedure of the EU Directive 2008/9/EC.

Given the UK’s exit from the EU on 31 January 2020 and the transition period until 31 December 2020, the EU VAT refund system can no longer be used for reclaiming UK VAT incurred as from January 1st 2021.

For UK VAT incurred during 2020, the EU VAT refund procedure can still be used, but the filing deadline is approaching: 31 March 2021!

Also UK established businesses reclaiming refund of EU VAT can make use of the EU VAT refund system for the last time (also to be filed before 31 March 2021).

EU established businesses can reclaim UK VAT until 31 March 2021

EU established business that incurred UK VAT during 2020, must make their refund claims by 31 March 2021 at the latest via the EU VAT Refund system.

After this date, the EU VAT Refund system will no longer be available for the refund of UK VAT.

For UK VAT incurred as from the 1st of January 2021, EU businesses will have to check if they can make a claim under the specific UK VAT refund procedures for overseas businesses (under the provisions of Part 20 of the VAT Regulations 1995 (SI 1995/2518)).

UK established businesses can reclaim EU VAT until 31 March 2021

From 1 April 2021 UK businesses will no longer have access to the EU electronic portal.

UK established businesses that incurred EU VAT during 2020, must therefore submit their refund claim by 31 March 2021 at the latest via the EU VAT refund system.

A refund claim of EU VAT filed by a UK taxable person related to transactions carried out as from 1 January 2021, will have to be submitted following to the conditions for taxable persons established outside the EU (13th Directive). 

Special status of Northern Ireland

According to the Northern Ireland Protocol to the Withdrawal Agreement, Northern Ireland (NI) maintains alignment with the EU VAT rules for goods. Under these arrangements from 1 January 2021, the EU legislation for VAT refunds continues to apply in Northern Ireland in respect of goods only (import of goods and purchase of goods).

Taxable persons established in NI that paid incurred VAT on goods in the EU, can continue filing refund requests via the EU VAT refund system.

On the other hand, EU taxable persons that incurred VAT paid on purchases of goods or imported goods in NI, can continue filing refund requests via the EU VAT refund system. The standard procedure of Directive 2008/9/EC will also apply in this case.

NI and EU taxable persons incurring VAT expenses on services in the EU and NI, or on invoices containing both goods and services, cannot reclaim this VAT under the EU VAT refund system. They should check if they can apply for a VAT refund under the specific EU and UK VAT refund procedures for overseas businesses, respectively.

Please do not hesitate to contact us if you would need assistance in recovering foreign input VAT or if you would have any further questions.