Recovering VAT on legal costs as a company operating in the EU, North America, Asia, EMEA, or Africa involves understanding the local VAT regulations and the reciprocity agreements between the regions in which your business operates. Here’s a simplified guide:
EU Businesses Recovering VAT: For EU businesses seeking to recover VAT on legal costs incurred in other EU Member States, the process is facilitated by the EU Refund Directive. Companies must submit their applications by September 30 of the calendar year following the year in which the VAT was incurred. The application is typically made through the electronic portal provided by the tax authorities in the company’s home country.
Non-EU Businesses Recovering VAT in the EU: Non-EU businesses can reclaim VAT incurred in EU Member States through the 13th Directive application process. This usually involves submitting a VAT refund application to each EU country where VAT was incurred.
North America: In the USA and Canada, for example, companies may be able to reclaim VAT/GST on legal services if they are registered for tax in the place where the service was used. This is highly dependent on local taxation laws and international tax treaties.
Asia, EMEA, Africa: Similar to other regions, the ability to reclaim VAT will depend on each country’s tax laws and any bilateral agreements they may have regarding VAT. Companies often need to have a local tax registration and may reclaim VAT as part of their regular tax filings.
For a global approach, companies are encouraged to consult with tax professionals or services that specialize in international VAT recovery, which can be complex due to the varying regulations across different regions.
Remember that the specifics will widely vary depending on the country’s legislation and the nature of the legal services rendered, so seeking professional tax advice is essential in ensuring compliance and maximizing VAT recovery.