EU VAT REFUND : simplified tax recovery for European companies

The EU-established companies can claim back the foreign VAT supported on their business purchases and travel expenses incurred in different member states of the European Union.

The EU VAT recovery procedure for European businesses is governed by the 8^th EU Directive.

The foreign VAT reclaim can be done quarterly, semesterly or annually. The VAT refund applications can be filed immediately after the end of the preceding calendar period, but not later than on September 30 of the year following the expense year. 

Thus, the foreign VAT billed in 2023 can be claimed back by the EU businesses until September 30, 2024.

[The same deadline applies to non-EU-companies claiming the VAT through the 13^th EU Directive in  Belgium, Denmark, Estonia, Greece, Spain, Hungary, Latvia, Poland, Portugal and Rumania. Other EU member states limit the VAT reclaim until June 30. Find more information in our article from 29/04/2024 : https://btobnice.com/vat-recovery-in-europe-non-eu-companies-urged-to-claim-vat-by-june-30/]

EU VAT RECOVERY RULES :  Directive 2008/09/EC

EU VAT refund eligibility: The European companies are eligible for the VAT refund through the 8^th Directive under certain conditions :

• Absence of fixed establishment, seat or residence within the member state of refund
• Absence of VAT registration or liabilities in the member state of refund
• Absence of taxable supplies in the member state of refund (except those covered by special schemes and by reverse-charge mechanism)

EU VAT deductibility: Each EU member state has its own rules on VAT recoverable categories of expenses, which reflect the internal VAT deductibility for local taxpayers.

EU VAT rates: There is a diversity of VAT rates applicable by different EU member states. The actual EU VAT rates are between 2.1% & 27%.

EU VAT refund period: In some EU member states, there are specific rules applying to number of claims and their chronology that must be respected in relation to the same expense year for avoiding rejections.

Minimum VAT reclaim amounts: The minimum amount of the annual VAT reclaim must be greater than or equal to 50 €. The min VAT amounts for shorter claim periods can’t be below 400 €.

EU VAT refund timeline: The Tax Administrations of the EU member states of refund must issue their decision within 4 months after the reception of the EU VAT refund application. In case of additional information requests, this period can be extended from 6 to 8 months. The decision of the Tax Administrations can be subject to appeal. Each EU member state has its own procedure and time limits for filing appeals.

EU VAT refund application: The VAT refund application must be done electronically through the tax portal of the country of establishment of the EU claimant. The are additional elements to be indicated and provided upon the electronic fling:

• Codes and subcodes of the claimed expenses, such as requested by each member state of refund
• Scans of invoices / import declarations over 1000 € and over 250 € for fuel
• Power of attorney for agents filing the EU VAT refund applications on behalf of the EU companies

The foreign Tax Office can additionally request all the original bills to be provided separately by post for a Tax audit.

The EU-established companies have no obligation to appoint a tax representative in the EU member state of refund. But the VAT agent can be helpful for optimising & securing the foreign VAT refunds.

Simplified EU VAT recovery

BTOBNICE accompanies businesses in their EU VAT recovery.

We take over the whole VAT reclaim process:

• Auditing your accounts payable and travel expenses for identifying recoverable VAT amounts
• Preparing the EU VAT refund claims and accompanying documents
• Encoding the expenses and submitting the electronic VAT refund applications on the tax portal of your country of establishment
• Following up on the submitted claims and managing exchanges with the Tax Administrations of the foreign EU member states
• Obtaining Tax decisions and filing appeals when required
• Monitoring VAT refunds and related bank transfers

For more information and VAT mandate, we invite you to contact our VAT expert : contact@btobnice.com