VAT refund

Possibility of a VAT refund paid in another Member State

Authors: Barbora Halousková, Jana Střelická, Markéta Gattnarová
VAT refund
In today's article, we would like to introduce or remind you of the topic of the institute of refund of value added tax (hereinafter referred to as "VAT") within the European Union, whereas the deadline is annually set for 30 September of the following calendar year. After this deadline, the right to claim a VAT refund for the respective calendar year expires.

The Czech VAT Act enables the VAT refund to taxpayers from another Member States as follows: “A taxpayer who has his registered seat or establishment in the domestic is entitled to a refund of input tax on the side of supply with a place of supply in another Member State in which he did not have registered seat or establishment during the refund period, in accordance with the rules laid down by that other Member State.”

In other words, if the taxpayer purchases goods or services in another Member States, he pays VAT of another Member States along with the price of the goods or services, which, however, he cannot claim in his domestic tax return but only via VAT refund institute. It is thus possible to claim a VAT refund, for example, on expense relating to foreign business trips (accommodation, training, local transport), the purchase of goods located in another Member State, selected types of services, etc.

For the possibility of claiming a VAT refund, it is necessary to submit an application by 30 September of the calendar year following the tax refund period, via the electronic portal managed by the Czech General Financial Directorate. To access the given portal, it is necessary to obtain an authorization, which is granted by the locally competent tax administrator within 15 days of receiving the application. It is therefore necessary to keep the submission of the application in mind well in advance. Once the application is submitted, it is forwarded to the another Member State from which the VAT refund is claimed, and the applicant is informed about this status.

The claim of a VAT refund is treated similarly as in the case of a domestic VAT deduction claim. Thus, the claim does not apply, for example, to the VAT associated with representation costs.

A VAT refund cannot also be claimed if the applicant is a person who, in the given period, carried out only transactions exempt from VAT without the right to claim VAT deduction or is a person not liable to VAT in the period in question. In this case, the applicant is notified of the rejection of the application via the electronic portal.

To sum up, VAT refund is an interesting way to claim VAT on transactions realized in another Member States. If you are interested in provision of services or consultations related to this agenda, do not hesitate to contact us.

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