How to Reclaim Foreign VAT

It is commonly thought that within the EU, recovering VAT on expenditure made whilst abroad is merely a matter of calculating the VAT at the applicable rate and claiming it via your VAT return.

However, the right to recover VAT on a VAT return is limited to VAT incurred in the country of registration. Overseas VAT is reclaimed by submitting a claim directly to the country concerned (this is called an ‘8th Directive claim’). Typically it can take months (sometimes years) for these claims to be processed and the VAT repaid.

For more details on recovery of overseas VAT, see HMRC's website.

A number of firms offer a VAT reclaim service in exchange for a fee, which is normally based on a percentage of the VAT repayments received.

Overseas VAT which is incorrectly claimed as input tax on a VAT return can lead to an assessment for VAT over-claimed and possibly trigger a penalty.

When the UK exits the European Union, the procedures for reclaiming VAT (if they remain in force) are likely to change considerably.