Who can explain European VAT?

[lyse]

Hello,

I'm doing the accounts for my partner who is a contractor and I need to do his VAT return. I don't know what to do with European VAT on purchases (21%). Could someone try to explain it to me step by step and in simple English (I really couldn't get what the accountant was telling me... I'm asking you before phoning him again!)?

Thanks a lot!

[Clog II The Avenger]

Hello,

I'm doing the accounts for my partner who is a contractor and I need to do his VAT return. I don't know what to do with European VAT on purchases (21%). Could someone try to explain it to me step by step and in simple English (I really couldn't get what the accountant was telling me... I'm asking you before phoning him again!)?

Thanks a lot!

Been there and got the European VAT T-shirt. (Others may have different information but this is the way the Customs and Excise advised) In order co claim back European VAT on expenses you have to register with both countries VAT authorities before you travel. There is a minimum amount to claim back and the who system is unworkable. I needed to charge expenses to a large multination company and it had to be worked out like so. EG. Cost of hotel 100 Euros plus local VAT = 118 Euros. If you are then charging a client you then have to charge UK vat on the whole amount eg. 118 Euros plus 17.5% = 138.65 Euros. What I did was to say to the client that the will also be a 5% admin fee on top of expenses because using a credit card and loosing on exchange.

If you are not charging expenses to an end client that you have to absorb the European element of the VAT yourself.

If anyone has managed to get away with claiming the European portion of the VAT back I will be interested because I don’t know anyone or any company who has managed to do it successfully.

[Joe Black]

Hmm, that sounds a strange way of doing things Clog. I would have thought that any VAT paid should be directly offset on your return?

Certainly on any invoiced purchases it shouldn't be payable (according to article 21 para 3 etc of the EU VAT agreement).

[MrsGoof]

thats the way I charge my customers.

I think the theory is that if £117.50 of expences were incurred by an employee then that amount is deemed to be collectable and paid to the employee.

In the end Gordo just gets a slightly bigger slice.