Did your company pay for overnight stays, fuel or taxi rides? Or did it buy other goods or services subject to local VAT in other EU member states in 2018? Chances are high that you can get a VAT refund! Please note that the deadline for 2018 refunds elapses on 1 October 2019.
It should be possible to get a VAT refund for many of your purchased services and goods. Of course, certain formal requirements are applicable. This bulletin will discuss when you are eligible to get a VAT refund and which requirements you will have to meet.
Where and by whom?
VAT can be recovered in all 28 member states, but also in Iceland, Norway and Switzerland by any business that is registered in one of the EU member states for VAT purposes.
Yet there are situations in which it is not possible to apply for a VAT recovery as the specific items of expenditure on which VAT is recoverable vary in each member state.
Refund requests should be claimed via the website of the tax authorities of the country in which your company is established and VAT registered. Refund requests will be handled by the member state of refund, the amount refundable will be determined under the VAT rules of that member state. The payment of the refund will be made directly to your company by the member state of refund.
Services and goods
In intra-Community B2B transactions VAT is in principle reverse charged to the customer. Still, however, there are services and goods that are bought locally where foreign VAT is charged, like overnight stays, taxi rides, purchasing and using fuel or office supplies. A local VAT reclaim should apply in such situations.
Member States can set the minimum amount that may be recovered under each VAT refund application.
The minimum for annual application is EUR 50 and EUR 400 for interim applications. Furthermore, it is important to note that the expense items that qualify for refund of VAT vary per country. If you wish to apply for a VAT refund, you should do this electronically through the portal of your local tax authorities. The member state in which VAT was incurred can request additional documentation.
The most important requirement, however, is that you should apply for a VAT refund before the 1st of October of the subsequent calendar year. This means that the VAT refund for 2018 should ultimately be applied for before the end of September 2019. If you snooze, you lose.
The member state of refund has 4 months to decide, starting from the date of receipt of the claim. The term will be extended when additional information is requested. The member state, however, ultimately should decide on the refund of VAT within 8 months of receipt of the application. Once a decision to issue a refund is announced, it should be paid within 10 business days after expiration of the above deadlines. If the payment of refund is delayed the tax authorities will have to pay late “refund” interest.
As shown, getting a VAT refund is bound to some particular rules, conditions and limitations. Therefore, if you have any questions, please feel free to contact one of our Crowe VAT specialists. We can assist you with the reclaim in each member state.