Disbursements are payments made on behalf of a client to a third-party supplier, where the client is the true recipient; these are outside the scope of VAT, meaning no VAT is charged to the client and the original VAT can’t be reclaimed. Recharges are business costs incurred by you during service delivery that are passed on to the client and are subject to VAT, which allows you to reclaim the original VAT but requires you to apply VAT when billing the client. Correctly distinguishing between these two, as they have opposing VAT treatments, is crucial for accurate VAT compliance and avoiding penalties in the EU.
Source: meridianglobalservices.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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