The VAT refund (VAT-REF) procedure can be a complicated process, and there are several common problems that businesses may encounter when applying for a VAT refund. In this article, EU Tax Advice explores some of the most common problems in the VAT-REF procedure.
Incomplete or incorrect documentation
One of the most common problems in the VAT-REF procedure is incomplete or incorrect documentation. To claim a VAT refund, businesses must provide evidence of the VAT that was paid, including invoices, receipts, and customs documentation. If the documentation is incomplete or contains errors, the tax authority may reject the VAT refund application.
Missing deadlines
Another common problem in the VAT-REF procedure is missing deadlines. Businesses must ensure that they submit their applications before the deadline, which for annual VAT-REF claims is September 30, following the calendar year for which the claim is to be filed. If a business misses the deadline, it may surely not be able to claim a VAT refund.
Delays in processing
Delays in the processing are another common problem in the VAT-REF procedure. The time it takes to receive a VAT refund varies depending on the country where the VAT was paid, and some tax authorities may take longer to process VAT refund applications than others. Delays in processing can be frustrating for businesses, especially if they need the VAT refund to improve their cash flow. Based on EU Tax Advice’s experience, processing and verification of the VAT-REF claim can take even more than 12 months.
Rejections and appeals
VAT refund applications may be rejected by the tax authority for various reasons, including incomplete documentation, errors in the application, or failure to meet the eligibility criteria. If a VAT refund application is rejected, businesses may need to appeal the decision, which can be a time-consuming process. If your decision was rejected our attorneys or tax advisers can represent you during the dispute with the local tax authorities.
Language barriers
Language barriers can also be a problem in the VAT-REF procedure, especially for businesses that are based outside of the EU. Some tax authorities may require documentation to be translated into the local language, which can add additional time and cost to the VAT refund process.
In conclusion, the VAT refund procedure can be a complicated process, and businesses may encounter several common problems when applying for a VAT refund. To avoid these problems, businesses should ensure that they provide complete and correct documentation, meet all eligibility criteria, submit their applications before the deadline, and be prepared to appeal any rejected applications. By taking these steps, businesses can increase their chances of successfully claiming a VAT refund.
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