UK businesses incurring EU VAT on travel, hotel or other expenses will no longer be able to use the 8thDirective online VAT reclaim system operated via HMRC. Instead, they will use the 13th Directive paper-based reclaim process. This requires individual claims to each country where there is a VAT claim. Last UK claims via the 8th Directive will be for the final quarter of 2020.

VAT refunds by Member States to taxable persons established outside the EU are subject to the following conditions:

• The request must be submitted directly to the Member State from which the refund is requested, in accordance with the arrangements determined by that Member State (Article 3(1) of the Thirteenth Council Directive 86/560/EEC of 17 November 1986 on the harmonization of the laws of the Member States relating to turnover taxes - Arrangements for the refund of value added tax to taxable persons not established in Community territory - hereafter '13th VAT Directive');

• The VAT refund may be subject to a reciprocity condition (meaning that the refund is only permitted if VAT refund is also granted by the third country - see Article 2(2) of the 13th VAT Directive). Spain, Italy, and Germany are amongst the countries where UK businesses have the most expenses, but as non-EU businesses, they will face new issues such as limited range of expenses (Spain, Germany) or mandatory appointment of a fiscal representative (Italy).

• Each Member State may require the taxable person established in a third country or territory to designate a tax representative in order to obtain the VAT refund (Article 2(3) of the 13 th VAT Directive).

According to Article 51(3) of the Withdrawal Agreement, a taxable person established in one of the Member States or in the United Kingdom is still to use the electronic portal set up by his State of establishment, in accordance with Article 7 of Directive 2008/9/EC, for submitting an electronic refund application that relates to VAT which was paid in, respectively, the United Kingdom or a Member State, before the end of the transition period . The application is to be submitted, under the conditions of the Directive, at the latest on 31 March 2021. The other rules provided for in the VAT Directive and Directive 2008/9/EC will continue to apply, until 5 years after the end of the transition, to these refund applications and the previous ones relating to VAT chargeable before the end of the transition period.