A company that is not registered for VAT purposes in a Member State and has incurred expenses in that Member State may recover the VAT it has paid. Application for the reclaim of VAT paid must be made in accordance with the procedure detailed by the 8th European VAT Directive. The application has to be made on paper with a specific form – usually provided by the Member State where reimbursement is requested – to which original invoices and a certificate of taxable status have to be attached.
In theory, this procedure is quite simple but in fact, reclaiming foreign VAT can be a very difficult task, especially in some countries. To face that issue, the European Council has issued a new directive to replace the current procedure by January 1st 2010.
Please find below the details of this new procedure:
1. One-stop shop
To obtain a foreign VAT refund, a company shall address an electronic refund application via the electronic portal set up by its own Member State. This electronic application shall contain information regarding the company (name and full address, email, VAT number, bank account details, etc.) as well as information regarding invoices (name and full address of the supplier, VAT number with prefix, date and number of the invoice, taxable amount, amount of deductible VAT, nature of the goods and services, etc.).
No more submission of the original invoices
The company will no longer be required to submit original invoices. The Member State to which the reclaim was addressed may however request the company to send by electronic means a copy of the invoices for which the taxable amount is EUR 1.000 or more (€ 250 if invoices concern fuel).
No more submission of the Certificate of VAT Status.
The company will no longer be required to submit a Certificate of VAT Status. The VAT status of the company as well as the validity of its VAT number will be directly confirmed by electronic means by its own Member (where the company is established) to the concerned Member state.
2. Increased deadline to introduce reclaims
VAT refund may currently be submitted to the concerned Member State at the latest on June 30 of the calendar year following the refund period. As from January 1st, 2010, VAT refund shall be authorized at the latest until September 30 of the calendar year following the refund period. In others words, a foreign company incurring German VAT during the year 2009 could request for the reimbursement towards the German VAT authorities via the electronic portal from its Member state until September 30, 2010.
3. Reduced period to notify the decision
Currently, decisions concerning applications for refund shall be communicated within six months of the date when the applications are submitted to the competent authorities. As from January 1, 2010, the Member State of refund shall notify the applicant of its decision to approve or refuse the refund application within four months of its reception. Refunds of the approved amount shall be paid by the Member state at the latest within 10 working days. If not, interest shall be due.
The directive shall apply to refund applications submitted as from January 1, 2010. It means that foreign VAT incurred by a company during the year 2009 could be refunded either via the current procedure (8th directive) if the VAT refund application form is submitted before December 31, 2009 either via the new procedure (Directive 2009/9) if the VAT refund application form is submitted as from January 1, 2010.