How VAT Reclaim Works in Europe

VAT recovery in Europe

One of the most effective ways to reduce costs in your company is to reclaim VAT on travel expenses, especially when these expenses are international. In the European Union, the rules vary depending on the country, but generally speaking, it is possible to reclaim VAT on the following expenses:

• Transport tickets: Whether by plane, train or boat.
• Taxi invoices: Keep all invoices so you can reclaim the VAT later.
• Car rental: Subject to certain time limits depending on the country.
• Accommodation: VAT on hotels is generally reclaimable.
• Parking: Parking tickets are also deductible in most cases.

There are other expenses where VAT deductibility may vary more depending on the country:

• Fuel: Depending on the country, fuel expenses may be deductible.
• Entertainment activities: In some countries, these expenses are deductible up to a certain limit, provided they have a business-related justification.
• Low-value gifts: These expenses may be deductible depending on the country.
• Meals with clients and employees: Usually subject to monthly spending limits that vary by country.
• Phone calls: Usually, those invoiced to the company are deductible.

Which countries allow companies to reclaim VAT in Europe?

In the European Union, in addition to Spain, most countries allow foreign companies to reclaim VAT on expenses incurred in the course of their business activities. However, the rules may vary between countries, and some have specific restrictions for certain types of expenses, such as meals or entertainment.

There is also a clear distinction regarding the type of expenses whose VAT can be deducted and the procedure to be followed to reclaim it, depending on whether the company applying is established in another country inside or outside the EU.

Here is a selection of official sources for each country, so you can consult the relevant legislation according to your needs. We recommend reviewing each source in detail depending on your specific case:

So, what should you do with this information now? We explain it in the following sections.

What do I need to do to reclaim VAT in Europe if I am a European company?

To reclaim VAT in Europe, you must submit an online application through the tax administration of the EU country where your company is established. In Spain, this is done through Form 360, which is filed online. On this topic, we have a general guide in our article on VAT reclaim, as well as another article that may be useful on VAT recovery for purchases.

Make sure you meet all the requirements before submitting the application, as the rules may vary between countries. After that, the tax administration will forward your application to the relevant country.

How can companies outside the EU reclaim VAT?

To reclaim VAT if your company is not based in the EU, you must follow the procedures established by the 13th European Directive, also known as Directive 86/560/EEC. This directive allows non-EU companies, through a procedure similar to that used by EU companies, to claim VAT they have incurred in certain European countries.

Some of the aspects to bear in mind are:

• Submitting the application to the relevant country: The application must be made directly in the country where the VAT was incurred, through its tax authority.
• Reciprocity agreements: Your country may need to have a reciprocity agreement with the EU country where you incurred the expenses. This means that your country should also have a mechanism to allow companies from that EU country to reclaim VAT.
• Fiscal representative: Some countries, such as Portugal, require you to appoint a local fiscal representative to manage the application.
• Required documentation: You will need to provide all necessary documentation, which may include original invoices and other documents supporting the VAT incurred.
• Deadlines: Bear in mind the deadlines for submitting the application, as they vary from country to country.
• Additional requirements: Some countries may request additional or specific documentation in order to approve the VAT reclaim.

Find out as soon as possible about the specific requirements and details for VAT declarations in Europe in the country of your choice. You can use the list of links we have prepared above for each country to access the relevant official documents. In most cases, you will find them on the same page.

You will find more details about the 13th European Directive in an article we wrote on the subject some time ago.

Reclaim VAT in Europe without headaches

Reclaiming VAT on travel expenses can be a complex task, especially when several countries are involved. The most efficient option for any company is to outsource this work to companies with experience, up-to-date knowledge and specialised expertise.

At 60dias, we are fully aware that not every company has the time or internal organisation needed to manage and reclaim all VAT-related expenses. That is why we offer our VAT recovery services, while also helping with the management of expenses that are so common during business travel across Europe.

We manage all your receipts for you and make your life easier by obtaining the valid invoices needed to declare and reclaim VAT.

You have the right to reclaim VAT in the European Union, and we make sure this right is always fulfilled. That is why we are leaders in this sector. Contact us if you think you could benefit from our help and free up workload in your company so you can focus on what truly matters: your mission and vision.