From 1 January 2010, there will be a number of changes to the procedure for making “8th Directive” EU VAT refund claims. This is the procedure whereby companies who incur VAT charges in another EU member state can recover that VAT, provided the company is not already VAT registered in that Member State. The changes should be of particular interest to companies who incur costs at European exhibitions (such as space or stand costs, or travel & subsistence expenses), and who then reclaim them.
The changes to be made are as follows:
• Claims will now have to be submitted in the country in which the claimant is VAT-registered. Previously, a business had to submit claims in the country in which the VAT was incurred.
• Claims will be submitted in an electronic format rather than the paper format. This should theoretically remove language barriers, since previously, when submitting claims in paper format in another country, the form may have been written in a foreign language making it very difficult for UK businesses to complete. UK companies will be obliged to register with the Government Gateway (http://www.gateway.gov.uk/).
• The deadline for submitting a claim will be nine months after the end of the calendar year - Previously, the deadline was six months after the end of the calendar year. In any given year, a business can make a maximum of five claims to each EU Member State where VAT has been incurred.
• The new procedure will start as from January 2010, and claims relating to VAT incurred in 2009 calendar year can be reclaimed from this date
• The authorities have four months in which to process the claim once received. If processed with no issues identified, the claim must be paid within ten days of the form being processed. If the authorities have any queries, a further four months can be given to the authorities to process the claim.
In theory the new procedures should allow claims to be processed and refunded more quickly and simply; in reality, the procedure does allow loopholes which allow the country refunding the VAT to slow down the process by requesting copy documentation, raising queries etc. It remains to be seen how quickly the new process will operate in practice.
The general rules relating to liability to pay VAT on exhibition expenses will not change in 2010, and UK companies who book space or stands at tradeshows in the EC will still be liable to pay VAT at the rate applicable in the country where the show takes place. This rule is expected to change with effect from January 2011.
MIA members can process claims through VATit's online portal - please log into our members' area.
