Brexit: UK government issues guidance on claiming VAT refund in Northern Ireland or in the EU

Northern Ireland Protocol:

The Northern Ireland Protocol to the Withdrawal Agreement means that Northern Ireland 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 but EU rules will not apply to supplies of services in Northern Ireland.

Businesses established in Northern Ireland who incur VAT on goods in the EU, and EU businesses who incur VAT on goods in Northern Ireland, will be able to recover this VAT through the electronic cross-border refund system. This enables a business to recover that VAT directly from that country (the UK or EU member state of refund) provided that it is not established in the country of refund and makes no supplies there.

Requests for refunds will continue to be dealt with by the country of refund.

Which businesses can apply under the EU VAT refund system?

In order to apply successfully for an EU VAT refund the applicant must:

• be a taxable person established in Northern Ireland or an EU member state, or the person applying should be their authorized agent.
• have a valid VAT number in an EU member state or, in the case of Northern Ireland, have a valid UK VAT registration number and be identified as trading under the Northern Ireland Protocol
• reclaim VAT on invoices containing the purchase of goods only

Separate application forms must be submitted fro each EU member state.

Refunds of VAT on goods for Northern Ireland businesses claiming from EU member states

Northern Ireland businesses can reclaim VAT paid on goods in EU member states from 1 January 2021.

How to make an application under the refund procedure

All applications must be submitted using the electronic online system. In order to be able to make an electronic application for refund of VAT you first need to register for VAT online services.

How to register for online services

You can register only for the given portal and follow the online instructions but you will need to have your VAT 4 Certificate of Registration and a copy of your last VAT Return at hand.

 Reclaim VAT expenses on services received in EU member states

Northern Ireland businesses that incur VAT on services received in EU member states or submit claims with invoices for both goods and services, cannot claim the VAT using the EU electronic system for VAT refunds.

When making VAT claims in any EU member state, you must make sure this does not include VAT expenses on services. EU member states will not refund VAT on services under the EU VAT refund scheme. Any VAT claims relating to services will be rejected.

Refunds of VAT on goods supplied in Northern Ireland to EU businesses

Who can apply?

You must be a taxable person established in an EU member state and you are claiming VAT expenses on goods only with the invoice showing only supplies of goods.

There are a lot more intricacies in applying for a VAT refund on goods and services in N. Ireland and the EU and business need to take more factors under consideration. We suggest going through the Guidance issued by the UK government in order to learn all about the application periods, how to submit your application and to make sure your application is valid.

Source gov.uk