VAT Refund within the EU

If a taxpayer purchases goods or services in other EU Member States, the local VAT is charged together with the purchase price. However, this VAT cannot be reclaimed through the domestic VAT return and may only be recovered through the VAT refund mechanism. For example, taxpayer may apply for a refund of VAT incurred on expenses related to business travel abroad (such as accommodation, training courses, and local transportation) as well as on purchases of goods located in another Member State, certain types of services, etc.

In order to be eligible for a VAT refund, it is essential to submit the refund application by 30 September of the calendar year following the VAT refund period. A VAT refund application must be submitted in the applicant’s Member State of establishment. In the Czech Republic, applications are filed through an electronic portal administered by the General Financial Directorate. Access to this portal requires obtaining the necessary authorization, which is granted by the locally competent tax authority within 15 days of receiving the application. For this reason, it is advisable to begin preparing the application well in advance of the deadline.

Entitlement to a VAT refund is assessed in a manner similar to the domestic right to deduct VAT. Consequently, a refund is generally not available for VAT incurred on expenses such as entertainment and representation.