Vat Refund & Reclaim Info

EU Considering VAT Changes

Banks, Insurance companies and financial institutions are VAT exempt, generally for most products they supply. Great you would think for the consumer, however it is not as they cannot reclaim any of the VAT they pay on services or goods. Therefore it is all part of the cost base on which the consumer is charged.

This long standing practice puts European banks at a price disadvantage to non European bank, like the US who do not have this same problem. Therefore non European banks can offer services to business at a cheaper rate than European banks.

Now though the European Union are considering changing these rules. Proposals put forward by the European Commission on Wednesday focus these measures. First, there would be a redefinition of the scope of the exempt services in an effort to bring more clarity.

Second, banks and insurance companies would be given the option of taxing their services if they wished.  This will make life more interesting for credit control within these orginisation when it comes to writing off bad debts.

The European Banking Federation also said it was a “first step in the right direction” although it added that there should be greater certainty established around the areas of provision of payment services, derivatives, securities, custodial services and intermediaries.

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VAT Refund: Why You Should Get Professional Help To Reclaim VAT

Large amounts of value added tax (VAT) on purchases made in Europe go unclaimed by companies each year. The main reason is that many companies are unaware they can reclaim VAT on purchases made outside their own countries. Another obstacle is the difficulty in making a claim. Such factors as language and bureaucratic complexities can make the whole procedure seem not worth pursuing. Fortunately, specialist firms exist to take care of the whole procedure and reclaim you VAT for you. The sums involved can be substantial. Here’s a guide to the ins and outs of reclaiming VAT.

If you do business in Europe, you should be aware that you are entitled to a Vat refund which has been charged on certain services you incur. These services include employee travel and relocation costs, exhibition and marketing costs, telephone and communication charges, and the costs involved in running representative offices. The problem is that reclaiming this VAT can be a frustrating experience owing to bureaucratic hurdles and language problems. Fortunately, you can put the whole affair into the hands of a specialist firm that can take care of the whole procedure for you. Here are some great reasons you should entrust your VAT refund job to a specialist firm.

Firstly, reclaiming VAT is an onerous and time-consuming process. There are language difficulties and each country has its own system and policies. A specialist firm has the expertise and experience to deal with each country.

Consider what each application entails. Firstly, you need to prepare applications in accordance with the VAT refund law of the relevant country. These generally have to be in the primary language of the country. These applications then need to be filed to the right department and at the right time. The VAT refund procedure then needs to be monitored and perhaps followed-up to ensure the application is going through the system. Perhaps there’ll be queries from the involved departments. These, of course, will be made in the language of the country involved. And possibly appeals will have to be made or extra documents submitted.

Also, a specialist firm will have the expertise and experience in VAT reclamation to get the maximum refund possible. These sums can be substantial. While VAT is meant to be a tax imposed on final consumers, it can prove a burden to firms who don’t reclaim their foreign VAT. This burden can comprise up to 20% of their foreign costs depending on the VAT rates in the country they operate. For example, recoverable VAT makes up 19.6% in France, 17.5% in the UK and 19% in Germany. And if you work in Ireland the VAT is a massive 21%

Another advantage of employing a specialist firm to process you foreign VAT refunds is that you don’t need to utilise any of your own staff or facilities. This allows your staff to work totally on tasks that are profitable for your company.

So if you’ve decided to look into getting a VAT refund, first check you can do it in time. If you plan to make a claim, you need to do it within 6 months from the end of the year in which the expense was incurred. Belgium and The Netherlands are exceptions. In these countries, claims can go back as far as three and five years respectively. Then look for a firm with a proven track record in getting VAT refunds to handle the whole procedure for you. Reputable companies operate on a ‘No Vat Refund - No Fee basis’. Generally, you just have supply the original invoice for the firm to get to work. Then just get on with your business and wait for your VAT refund to arrive.

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Condoms and Vat

Mary Harney has got herself into a little bit of hot water in Ireland over a condom and VAT. The Minister for Health in Ireland Mary Harney’s claim that EU legislation prevents the Government from reducing VAT on condoms is complete rubbish.

She made the gaff yesterday while unveiling of the new five-year strategy of the Crisis Pregnancy Agency. And her office took, it seems, until this morning to shuffle out a junior to say the Minister was saying that VAT could not be taken off condoms completely.

And all this from the most right wing of neo-conservatives in Ireland who is renowned for her tax cutting insistence at every turn, but apparently not on condoms.

When politicians don’t want to do something often it is the European Union that is blamed for stopping them - take the heat away from their own decisions. However I am happy to report this Minister of State has been caught out, great when that happens.

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Vat Reclaim Service

Most companies do not seem to be aware of the possibility of reclaiming VAT in some circumstances. Firstly if your company is based outside of the European union and you pay EU VAT for any goods or services then you can reclaim that VAT. Now just because you can do it does not mean that it is an easy process, and this is why there are many companies set up to reclaim VAT on your behalf.

Secondly, if you company is based inside the European Union and you have paid VAT on any goods or services from another European country, then again you can reclaim this VAT. Again it is better normally to use outside help for this process.

What do the service providers do? They come into your company and take copies of invoices where you have paid VAT needlessly and they complete all the paper work from there. These companies are expert in what they do, it is their full time occupation and they know the ins and outs of dealing with VAT for all the European countries.

Most of these companies will work on a no refund, no payment basis - so it is a win - win situation for everyone - except of course for the vat man.

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