The European Union directive came into effect on January 01, 2010 (Directive2008/09/EC) introduced a new prospect for established and registered businesses running within EU to request the VAT Refund sustained in other EU member states. Altogether 27 member states come in EU, which struggled to recover VAT in each of other member states. There are some specific conditions and rules which must be followed to get a VAT refund. These rules are initially based on the purpose and expense type and may vary for each of the member states of EU.
The EU Directive allows businesses to claim the VAT refund through the official websites of the tax authorities of the specific state where the petitioner is registered with. The directive also provide the change in the deadlines in applying for the claim also setting a suitable time span for the processing refund after collecting all the fact and figures by the authorized officers.
Only a business which is registered for VAT in one EU member state is eligible to claim for the VAT incurred in other EU member state. The business want to register for VAT purpose in a particular member state, it should too register in that country to recover the VAT refund through its registration details. Further, if the business settlement has a residential property or a set establishment or a taxable trading of goods or services in the specific member state of EU, then in the incurrence of the VAT in that specific state, the VAT refund application will be straight away rejected through the upgraded guidelines of the Directive 2008/09/EC.
Further, it is to be noted that member states of European Union (EU) and European Free Trade Association (EFTA) are eligible and allow setting the minimum recoverable amount under every VAT refund application. The minimum range of the amount for the annual application submission varies from EUR50 to EUR400.
Rules and Regulations – Simple Steps of VAT Refund
VAT refund process though can be processed in very simple and lined up steps, yet little awareness and informative approach about the rules, limitations and requirement can make this much comfortable and user friendly.
- The applicant must remember to submit the VAT refund application form by September 30, of the following year. Though there is a provision to applying for a quarterly refunds because of having different due dates. Also, the applicant can represent or relate a period of three month in case of having different due dates, only thing need to be considered is that the specific period must represent the balance of the following calendar year.
- The very basic and general rule for filling up the refund application is that, it must and must be filled through the official and authorized portal of the tax authorities in the country where the petitioner is registered only by the date of 30 September of the calendar year. Other privately handled portals are usually not acceptable by the authorities as it may found some flaws and fraudulence in the data and figures.
- All the VAT Refund applications must be submitted online only. With reference to the IT requirement online applications can easily refine and verify the authencity of the application. Another reason is that every country has different format of application forms, the method of filing the request and the certifications made by IT department of that particular country.
- The claimant must have all the supporting documents with self, viz., original or copy of the invoices, import documents or other, so can submit immediately at the requirement by the authorities during the verification. According to the rule set by Court of Justice of European Union (CJEU), is a non-resident business can submit the duplicate copy of the invoices in case of missing of the original ones.
- The claimant must ensure that all the essential supportive documents along with the refund application must be received by the foreign authorities by the due date and appropriate format. Only after getting the receive about the confirmation of the application submission the petitioner can confirmed about the application process completion.
- One too must ensure that all the required fields should be filled with all the accurate information, figures, data and details. Though the application is submitted electronically, thus once it is submitted to the authorities won’t be reframed again. Thus the applicant must be very careful about providing the exact and prominent information asked in the application fields for the recovery of VAT.
By following some simpler steps one can easily recover Foreign EU VAT. The only authentic website of the authority should be taken up for filing the refund application. Also, if a refusal occurs of the application by the Foreign Fiscal Administration, the concerned business can resubmit the new claim after generating the missing documents and information. In other cases, where the Tax Authorities consider that the charged VAT has been figured incorrectly, then the claimant could be asked to arrange a acknowledgement note defining this.
Thus to make the VAT refund claiming process much comfortable the expense claim management system could be an advantageous aspect for the businesses supporting them a clear perspective about the Refund procedure. Also, this gives a clear vision about the procedure of the application taking all the expense notes into consideration, facilitating the easy and expected VAT recovery inside or outside countries of European Union.