The VAT refund procedure, also known as VAT-REF is a process that allows businesses to recover VAT paid on refund for goods purchased or services used within the EU and used for business purposes. In this article, EU VAT Advice explores the VAT refund procedure.
Who can claim a VAT refund?
The VAT refund procedure is available for businesses that are registered for VAT and that have incurred VAT on goods and services that are used for business purposes. This includes businesses that are based outside of the European Union (EU) but have paid VAT in an EU member state. For businesses based out of the EU, there is also provided special VAT-REF procedure that however based on different rules and is directed only to the non-EU countries that also apply, on the basis of reciprocity, the VAT refund for the EU countries. This matter will be touched on in a separate article.
The VAT refund procedure is not available for goods and services that are used for personal purposes, and businesses cannot claim VAT refunds for goods and services that are exempt from VAT. Also, some VAT refunds can be limited, this, however, is usually limited to the goods that can be used for both personal and business use.
How to claim a VAT refund?
The VAT refund procedure varies depending on the country where the VAT was paid. In general, the following steps are involved in the VAT refund procedure:
Step 1: Gather the necessary documentation
To claim a VAT refund, businesses must provide evidence of the VAT that was paid, including invoices, receipts, and customs documentation. The documentation must clearly indicate the VAT amount that was paid, the name and address of the supplier, and the date of the transaction. The minimal amount of the claim cannot be lower than EUR 50 for annual VAT-REF claims and EUR 400 for VAT-REF quarterly claims.
Step 2: Submit the VAT refund application
The VAT refund application must be submitted to the tax authority in the country where the taxpayer is established. The application must include the necessary documentation, along with information about the business and the VAT that is being claimed. Although, the VAT-REF procedure was unified some time ago, little differences between the countries may occur.
Step 3: Wait for the VAT refund
Once the VAT refund application has been submitted, the tax authority will review the application and the documentation. If the application is approved, the VAT refund will be paid to the business.
How long does it take to receive a VAT refund?
The time it takes to receive a VAT refund varies depending on the country where the VAT was paid and the explanations requested by the local tax authorities. In general, businesses can expect to receive the VAT refund within three to six months after the application has been submitted.
It is important to note that some countries may require additional documentation or may have different deadlines for submitting VAT refund applications. Businesses should check with the relevant tax authority to ensure that they are complying with all requirements. EU Tax Advice can represent your company during VAT-REF verification procedures, which let you speed up the process and better understand the tax office requests.
Conclusion
The VAT refund procedure allows businesses to recover VAT paid on goods and services that are used for business purposes. Businesses must provide evidence of the VAT paid and submit a VAT refund application to the relevant tax authority. The time it takes to receive a VAT refund varies depending on the country where the VAT was paid. Businesses should ensure that they comply with all requirements and deadlines to ensure that their VAT refund applications are approved in a timely manner.
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