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Minggu, 14 Maret 2010

Reclaim VAT on EU transactions

All 25 countries in the European Union impose VAT. However the rates vary from country to country, though there are currently moves in the EU to standardise the range. The differences in value are quite wide and averages around 19%, with top rates reaching 25% in some countries.

In addition, countries tend to impose VAT on different items. In the UK for example VAT is not imposed on children's clothing or books.

Surprisingly few businesses realise that they are in fact able to reclaim VAT on many cross-border transactions. According to some estimates, US companies are currently reclaiming only 20% of the more than 1 billion dollars they are paying in VAT in Europe, whereas German companies are giving away an estimated 1.2 billion dollars in unclaimed European VAT refunds.

Clearly if you are going to be doing a lot of business in Europe you should consider reclaiming your VAT as part of your business strategy.

According to current regulations you can recover most of your VAT expenses such as those paid on:

  • Business travel costs. This includes car rentals, hotel accommodation, meals, gas expenses, telephone expenses, etc
  • Business operating expenses (e.g. maintenance costs)
  • Marketing/advertising services
  • Professional advice such as that obtained through business consultancy services
  • Trade-fair expenses and conference costs
  • Various items of capital expenditure (e.g. machines and equipment)
  • Exports into Europe and inter-European transfers of goods (subject to certain limitations)

However knowing what you can claim and claiming it are two different things. In order to reclaim all your VAT expenses you will need to undertake the steps in our checklist below.


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