VAT on EU services

Elemy · Jul 27, 2010

I am going to be hiring a minibus in an EU country and obviously don't want to pay the VAT on it. I was under the impression that we can just give them our VAT number and they wouldn't charge it at all, but they have told us that as the services are being 'consumed' in the country of purchase, they must charge VAT. If this is correct, how on earth do we go about claiming it back?

Thanks in advance!!

elaine@cheapaccounting · Jul 27, 2010

I assume that you are vat registered and this is for business use.

Elemy · Jul 27, 2010

Sorry elainec100, yes that is correct.

David Richards · Jul 27, 2010

Elemy said:
I am going to be hiring a minibus in an EU country and obviously don't want to pay the VAT on it. I was under the impression that we can just give them our VAT number and they wouldn't charge it at all, but they have told us that as the services are being 'consumed' in the country of purchase, they must charge VAT. If this is correct, how on earth do we go about claiming it back?

Since January 2010, there's been a new online method to reclaim VAT paid in other EC countries, you can access it via the HMRC VAT online website.

There are a number of conditions that you have to meet to qualify for a refund. All the details are on the HMRC website. Extra information (including the classification cdodes etc) are in VAT Notice 723A.

Elemy · Jul 27, 2010

Thank you, David, that is really helpful. Didn't know about all that. Will have a good look at it. Thanks again

David Griffiths · Jul 27, 2010

You need to check

a) if there is any VAT charged on minibus hire. Obviously different countries have different rules but in the UK it's zero rated if the vehicle has 10 ore more seats. There doesn't seem to by any point in wasting energy if there's no VAT charged!

b) if the rules of the country concerned actually allow reclaim of this, even if it is a business expense. Many EU members don't permit recovery of VAT on hotels and meals for business trips, for example.

Elemy · Jul 27, 2010

Thanks for your reply David G. The minibus has over 10 seats but the company (in Italy) has told us they must charge VAT on it so unless they are trying to con us (I hope not!) then I imagine they must be right. I will check it out anyway.

Your second point is interesting. Does the UK / HMRC not allow reclaim of VAT on meals / hotels abroad?

David Richards · Jul 27, 2010

David Griffiths said:
... if the rules of the country concerned actually allow reclaim of this, even if it is a business expense. Many EU members don't permit recovery of VAT on hotels and meals for business trips, for example.

Elemy said:
Does the UK / HMRC not allow reclaim of VAT on meals / hotels abroad?

It's not what HMRC allow, it's what the VAT authorities in the other country allow.

Although you are using the HMRC Online website to process your VAT reclaim, you're actually claiming the money back from the VAT authorities in the other country - not HMRC. Therefore you have to meet the rules as set by those VAT authorities.

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