VAT Refunds for EU Businesses and Non-EU Businesses
Suppose you are charged VAT on purchases made in a European Union country where you are not a resident. In that case, you may be allowed to apply for a VAT refund from the tax authorities in that country.
Codes for Goods and Services in the EU
When submitting a claim for a VAT refund, you must use specific codes to describe the goods and services on which you paid VAT. These codes are:
- Hiring means of transport
- Expenditures relating to means of transport
- Road tolls and road user charges
- Travel expenses, including taxi fares and public transport fares
- Food, drink, and restaurant services
- Admissions to fairs and exhibitions
- Expenditures on luxuries, amusements, and entertainment
How to Claim an EU VAT Refund
Businesses that wish to claim an EU VAT refund must make their claim electronically. Your online application must be made to the authorities in the country where your company has its home office.
The authorities in the country where you have your home office will review your request for a VAT refund. If you are eligible for one, the local authorities will forward your claim to the authorities in the other EU country. The EU VAT refund process is consistent for all member nations.
Steps in Claiming an EU VAT Refund
The following steps are involved in claiming an EU VAT refund:
1. All applications for an EU VAT refund must be received by September 30 of the calendar year after the refund period.
For example, a business that wishes to claim a VAT refund for 2022 must submit the application before September 30, 2023. All applications must be submitted online.
2. The Member State of Establishment (MSE) confirms receipt of the application.
The MSE must forward confirmation of receipt “without delay”. The confirmation must be made electronically and include the date the application was received.
3. The MSE has 15 days to forward the application to the Member State(s) for a refund.
The MSE will not forward the application for a refund during the 15 days if it finds any of the following situations exist:
- The applicant is not a taxable entity under the law
- The applicant only carries tax-exempt goods
- The applicant does business under the special scheme for small enterprises
- The applicant’s VAT is covered under the flat rate for farmers
4. The MSR (Member State of refund) notifies the applicant of its decision.
The MSR will decide whether to approve or refuse the refund within four months. In some cases, the MSR needs further information to make its decision. In this event, it will notify the applicant by e-mail within that time. The applicant has one month to provide additional information from when the request is received.
The MSR should provide the applicant with its decision within two months of receipt of the additional information.
5. Payments to the applicant, if any, will be made in the MSR.
On request, they may be made in another Member State.
Interest Payable on EU VAT Refund
A claimant is entitled to interest on their VAT refund if the country issuing the payment is late.
VAT Refunds for Non-EU Businesses
Suppose your business is not based in the EU and you have been charged VAT on business activities where you have not supplied goods or services</b>. In that case, you may be entitled to a VAT refund. For example, you are running a business based in Switzerland, and one or more of your employees attend a conference in Belgium. VAT is added to the hotel bill.
How to Claim a VAT Refund as a Non-EU Business
As a non-EU business, you can send your application for a VAT refund to the tax authorities in the EU country where the VAT was charged.
Some EU countries will only grant a VAT refund if the country where your home office is based offers a similar arrangement for businesses from that EU country. Your company may not decide to apply for a VAT refund if the amount is insignificant. If your firm spends a lot of money on business activities, the VAT can add up. In that case, it is worthwhile to take the time to submit the relevant documentation to claim the refund.
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