Article last updated on 31/01
With the uncertainties around the Brexit (withdrawal) Agreement that is currently under discussion, we want to update you regarding the potential implications on the VAT reclaim procedure.
As per article 51 of the draft exit paper the existing refund model is supposed to remain until 31 March 2021. This means it should be possible to submit VAT Refund applications and their related invoices to the United Kingdom (UK) and from the UK via the EU Member States national Tax Authority Portals, as we do today. However, due to a lot of uncertainty regarding the outcome of the Brexit agreement and the threat of a No Deal”, the EU fiscal authorities are advising companies to submit their 2018 VAT reclaims to and from the United Kingdom via their national tax portals prior to 29 March, 2019.
In case of a “No Deal”, there are strong indications that EU companies will no longer be able to submit their VAT reclaims to the UK via their national portals after March 29, 2019. Likewise, UK companies will lose the opportunity to submit their claims to other EU countries through their UK portal. Instead both will likely have to follow the procedures stipulated by the EU 13th directive. This has all sorts of implications including the fact that scanned invoices may no longer be acceptable, only originals, and reciprocity may apply between some of the countries meaning that until reciprocal agreements are implemented some countries may not give back VAT to UK companies.
What does this mean for you?
Companies trading with the UK should be prepared for all eventualities due to uncertainty re Brexit and thus we recommend:
- Companies should send their 2018 receipts and invoices to Cash Back immediately so that we can submit your VAT applications under the existing EU directive 2008/9 before 29 March 2019.
- EU companies should keep all the originals of their receipts and invoices from UK suppliers from now onwards (and even those from 2018 if they have not yet been destroyed).
- UK companies should keep all their original receipts and invoices from other EU suppliers from now onwards (and even those from 2018 if they have not yet been destroyed).
If the present Brexit agreement is signed before March 29 2019 or if there is a postponement agreed, then there would be no immediate change regarding the VAT refund procedure. This means businesses in the EU submitting VAT refund claims to the UK Authority and/or businesses in the UK submitting refund claims to the EU Authority countries will still be submitted under the 2008/9 Directive (formerly 8th directive). According to this draft agreement, it will still be possible to submit scanned invoices via the national portals up until March 31st, 2021. After that, there is a real risk that original paper invoices will be required in accordance with the 13th VAT Directive.