Deductible VAT: what you can (actually) reclaim

The three cumulative conditions:

1. The expense is incurred for business purposes (no private use);
2. You hold a compliant invoice stating the VAT (all 14 required details — an invoice in the director’s name rather than the company’s is enough to invalidate the deduction);
3. The VAT is due from your supplier (on delivery for goods; on payment for services, unless the supplier uses the accrual basis).

Common cases table:

The exclusion of hotels for employees and directors (but not for invited third parties) and the 80 % rule on fuels for tourism vehicles are the two most common expense report pitfalls — proper categorisation of expenses in the software prevents recurring errors.

VAT credit: when deductible VAT exceeds collected VAT (major investments, start-up phase, exporters), the CA3 shows a credit. Two options: carry it forward to future returns, or request a refund (from €760 under the standard monthly scheme; from €150 for annual claims). Refunds are usually processed in 15-30 days — but first refunds for a new company often trigger a documentary audit: have the invoices ready.

Mixed activities (taxable + exempt: certified training, healthcare, bare leases, etc.) apply a deduction coefficient: VAT on shared expenses is only deductible in proportion to the taxable activity. A technical issue to align with your accountant — but one to spot yourself: invoicing 30 % of turnover as exempt without a coefficient means over-deduction every month.

The top 3 audit-adjusted errors:

1. Deducting from non-compliant invoices — pro forma, purchase orders, receipts without detailed VAT, invoices in the wrong name. VAT is only deductible on THE final compliant invoice.
2. Deducting too early on services — VAT on a service is only deductible on payment (unless the supplier states “VAT on accrual basis”). Deducting upon receipt of an invoice for a service paid in 60 days creates a systematic mismatch, detectable and adjustable.
3. Forgetting adjustments — a capital asset changing use (company car switched to mixed use, property let bare) triggers VAT repayments proportional to the remaining years.