Record 19% VAT from Germany

Hello,

I bought electronic components on a UK website but when I received the invoice I found out that the VAT rate was at 19% and their VAT code starts with “DE”…

I’m now wondering what would be the best way to record the purchase and also how can I claim the VAT back?

Thanks

Hi, you would need to put the invoice in at gross, ideally the German company should have sold you the item at 0% but they can only do that if they know your UK VAT number. However if you have a German VAT number company which I assumee isn’t the case then you could of course claim it that way. As for the position you’re in you’re best putting it through as gross, then making a special claim via HMRC for the 19%, just to make you aware it may take up to 6 months, and some admin is involved. Depending on the VAT value it may not be worth it. The service with HMRC is known as the “VAT EU Refund service”. However to clarify, you can not put the 19% DE VAT into your UK claim (box 4).

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** Just to clarify, the above, meant to read, if you have a German VAT registration, which I assume you haven’t. Hence why I said you can not enter it into a UK VAT reclaim, they either need to sell you at 0%, explained below or you could do the separate VAT EU Refund claim I mentioned above.

Also as mentioned they could have removed the VAT and sold at 0% based on the EU rules of trade, known as EU VAT reverse charging. But to do that, they will need to reissue the invoice without VAT and take your GB VAT number as evidence of using the scheme.

Any other questions. Please let me know if you have any other queries.

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Thanks a lot for your reply!

You assume rightly that I don’t have a German registration.
The money has been debited from the account with a 19% VAT rate so it is too late to get it changed now… The only thing I can do is make sure that next time they will set the rate to 0%.

I will try to use VAT EU Refund claim and see where it takes me.

Meanwhile, I’m a bit hazy on how to record the purchase on QF. How do I record it as “Gross”?

To record it as gross, just enter the amount including any VAT

No problem. Anytime. As Parker says, put the invoice on for full amount (gross). Making sure not VAT is selected so that it comes back to what the bank transaction was.

Ok thanks! I entered the full amount debited from my account in the “total” field and selected the rate “NO VAT”.

I also enrolled for the “EU VAT refunds” and I’m now waiting for the activation code… I’ll probably come back with more questions when the claim goes through.

Development of the story:
The German company that charged me 19% VAT has sent me back the VAT amount to my bank account.

Could anyone please shed some light on how to record the transactions? Should I keep the original payment as full amount (gross)?

Hi there. As that has happened. Select a same expense nominal on the refund when tagging. That will effectively Dr bank and Cr the expense nominal that will mimick the effect of the vat reclaim which in this case has been automatic as the supplier has given you a direct refund. The other way to do it is by a credit note if you’ve been supplied one. Again to the same expense nominal

Hi,
Sorry I’m not sure I fully understand what I need to do…
I modified the details of my supplier on QF to “VAT Registered in another EC Member State” and this added the line “EC VAT EXEMPTION: -0.00” to the purchase. And this purchase is seen as “Paid” with No VAT.

From the bank feed I have my refund of the 19% VAT and have the choice to tag it as a refund or as a payment from a customer. Should I select Refund and allocate it to my purchase?

If so, will the tax-man be happy with it or do I need additional entries on QF?
Thanks a lot for your help!

When tagging I would select the something else (bottom option) and choose the expense nominal that was used on the original purchase. Yeah the tax man will be happy as you’re not making a claim for VAT.

As for the original purchase entry, assuming you have the german vat no. And, as it seems you have entered the correct option on the supplier then you should see that on your next vat return the purchase adds detail to box 2, same in box 4 then in box 9. It’s quite complicated to say in text why all the above boxes are effected. Of were talking about a large amount then or certainly large as a % of usual purchase then it’s best to get it right. If you need any further help with this let me know.

All done! Thank you very much for your help!