Recovery of VAT on international travel expenses (I)
Going out of the national territory to sell products or services is a practice increasingly rooted in Spanish companies and a positive consequence, for many of them, of the serious crisis suffered. The costs involved in this commercial work are not few, as we saw in a recent post and every time there is a greater interest in the recovery of VAT of international travel expenses.
But as each country does not stop having its own fiscal and administrative rules, let’s see how and in what cases it is possible to recover VAT from travel expenses in one of the most visited countries in our environment: the United Kingdom.
First of all it is necessary to distinguish if it is a company with permanent establishment in the United Kingdom, or it is a company located in national territory whose employees travel to that country. Let’s see the first of the cases.
If it is a company with a permanent establishment in the United Kingdom, any VAT attributable to the travel expenses of its employees for the purposes of the UK business must be recovered through the VAT return of the entity in that country.
Logically, the travel expenses generated have to be linked exclusively to the activity of the company in question, including within these the most common, such as accommodation and meals, the expenses of the trip (fuel, car rental, etc.). ) and other expenses related to business matters.
The supplier is obliged to provide an invoice in a single format, either paper or electronic, within 30 days of the delivery of the merchandise or service provision, although the company does not have to provide such supporting documents when presenting the declarations of VAT corresponding.
However, all supporting documents must be kept for a minimum period of 6 years in case they are requested by the United Kingdom Tax Agency (HRMC) and, as in Spain, the right to recover VAT from a prescriptive invoice 4 years.
On the other hand, when it comes to the VAT recovery of the travel expenses of the employees of Spanish entities that have to move to the United Kingdom, the procedure varies substantially.
In this case, to claim VAT paid in the United Kingdom on services or products acquired in the development of their professional performance in that country, companies must use the European VAT reimbursement scheme (the “reimbursement scheme”). In order to apply this scheme, the following conditions must be met:
The entity is not registered in the United Kingdom and is not obligated or can not be registered in the United Kingdom. The entity has no registered office or residence in the United Kingdom. The entity does not make supplies in the United Kingdom (subject to limited exclusions).
As in the other case, companies may request the refund of VAT associated with travel expenses provided they are linked exclusively to the activity of the company, including accommodation and meals, trade fairs and fuel costs, among others.
In this case and although there is no maximum limit as to the amount of VAT to be claimed, minimum limits have been established: £ 295 when the claim is less than a calendar year, but not less than three calendar years, and £ 35. when the claim refers to a calendar year or the rest of a calendar year.
Claims for VAT recovery of travel expenses must be supported by valid VAT invoices from the United Kingdom, as is obvious, and for this it will be enough for a Spanish entity with VAT registration to complete an online form provided by the fiscal authority in Spain. This form will be sent through the Spanish tax authority, which will send the request to the United Kingdom Tax Agency (HMRC) for consideration.
As with companies with a permanent establishment in the United Kingdom, invoices in any of their formats, paper or electronic, do not need to be sent when the claim is filed, but they must be kept in case they are requested by the Tax Agency of the United Kingdom. United Kingdom (HRMC).
Notwithstanding the foregoing, the invoices must be scanned and attached to the claim if the value of a single invoice is equal to or greater than £ 200 in the case of fuel and £ 750 for all other supplies.
Items not included in previous claims can be included as long as they are related to the VAT charged in the calendar year of the claim.
We saw at the beginning of this post that the supplier is obliged to provide invoice after the delivery of the merchandise or service provision, but for retail suppliers or “retailers” in the UK it is possible to issue simplified invoices, perfectly valid for the purpose of recovery of VAT, even though they contain considerably less information than a complete invoice, provided that their amount is less than 250 pounds.
In addition, in practice, and given the difficulty of obtaining an invoice depending on which cases, they also accept simplified invoices of up to £ 200 in the case of fuel and up to £ 750 for those other services where it is difficult to obtain an invoice, such as transports, meals, etc.
As you can see, it is now possible to recover VAT from international travel expenses and in 60 days we have been specialists since 2008. Contact us and we will show you the way to increase the profitability of your business.