VAT recovery in Europe : non-EU companies urged to claim VAT by June 30
The 13th European Directive entitles companies established outside the EU to claim back the VAT paid on business related expenses.
The VAT refund can be granted to companies fulfilling specific requirements :
- Having no establishment, nor registered office, nor residence in the country of expense
- Being not VAT registered and having no VAT obligations in the country of expense
- Having a valid VAT number or its equivalent in the country of establishment
- Having purchased goods and services for conducting non-exempted business operations
Difficulties
Even though the 13th EU Directive is deemed to harmonise the VAT recovery rules within the 27 member states, the VAT reclaim procedure and deadlines differ in each country :
Tax representation: An appointment of the local tax representative can be required in some EU member states, while others accept a direct reclaim being filed by non-EU companies.
Filing: Electronic VAT reclaim filing being put in place in some member states, most EU countries are still requiring the hard paper invoices and accompanying documents to be provided by post.
Deadlines: The main deadline for the VAT reclaim in Europe is fixed on June 30 of the year following the expense year. This gives non-EU companies a limited time period of 6 months for claiming back the European VAT. In parallel, some EU member states accept the VAT reclaim from non-EU companies until September 30, or even until December 31 of the following year.
2023 EU VAT Reclaim for non-EU companies:
30/06/2024: Austria, Bulgaria, Czech Republic, Germany, Finland, France, Croatia, Ireland, Italy, Lithuania, Luxembourg, Malta, Netherlands, Sweden, Slovenia, Slovakia
30/09/2024: Belgium, Denmark, Estonia, Greece, Spain, Hungary, Latvia, Poland, Portugal, Romania
31/12/2024 : Cyprus
The identification of the refundable VAT is not simplified by the EU Directive. Indeed, in addition to different currencies, each EU member state has its own VAT rates and VAT deductibility rules. The general deductibility can be restricted for non-EU companies based on reciprocity rules, if their country of establishment is not granting VAT refunds on similar expenses.
Some country specific formal requirements for VAT invoices and linguistics burdens in communication with foreign tax authorities can make the VAT reclaim time consuming. This could sometimes lead to the total rejection of the VAT reclaim or to the partial loss of the refundable VAT amount.
Opportunities
Regardless different deadlines for the VAT reclaim in Europe, we recommend non-European companies to file their requests by June 30. This will help to harmonise the whole process, to avoid late submissions and to accelerate the refunds paid out by the competent tax authorities.
BtoBnice will be happy to accompany your business in the European VAT recovery: contact@btobnice.com
