VAT refund

Which companies can apply for a VAT refund or rebate?

Both companies established in an EU country and companies established outside the EU may claim a refund of VAT paid on purchases or services received outside their country of establishment.

What requirements must be met by the applicant?

Requirements to be met by the applicant include but are not limited to the following:

• To be entitled to a VAT deduction. To carry out transactions subject to and not exempt from VAT in their own country of establishment. It is necessary to have the status of a VAT taxable person.
• Not to sell (with few exceptions) or to be established in the country where the input VAT to be recovered was paid.
• • Exceeding the minimum amounts set by each country to be eligible for VAT refunds.
• • Incurring input VAT in any of the transactions that give rise to VAT recovery and doing so in the course of the activity giving rise to the right of deduction.

Which transactions entitle to VAT refunds?

VAT is only recoverable when it is paid by a company in the course of its business activities. Invoices that are not related to the company’s activity do not qualify for a VAT refund.

The most common transactions eligible for VAT recovery are the following:

• Fairs and conferences.
• Travel expenses. Especially, accommodation and transport.
• Transportation expenses. VAT on petrol, tolls, etc.
• Catering expenses.
• Import VAT.
• Installation and maintenance contracts.
• Logistics services.
• Professional and marketing fees.
• Other

Is the procedure for claiming VAT important?

The procedure for claiming reimbursement of VAT paid in other jurisdictions is vital to the success of the application. Although the legislation authorising the application/claim of VAT derives from the 8th and 13th EU Directives, individual EU countries have established their own rules and limitations. That is why it is so important to have experts in charge of such procedure.

These applications are subject to strict deadlines. In the event of late or incorrect filing, the application may be refused by the country of refund. Furthermore, when the VAT amounts claimed are very high, verification procedures are often undertaken to check that the amount claimed is correct.

Is a reciprocal convention and the appointment of a tax representative necessary?

In cases where the applicant is established outside the EU it may be mandatory to appoint a tax representative who will be liable for incorrect or improper returns. Likewise, the countries of the companies where they are established must have reciprocal conventions in place so that they can claim back the VAT paid in Europe.

What if the return is not made effective within the legal deadline?

In cases where the Tax Agency exceeds the deadlines set for the VAT refund, the applicant is entitled to receive the amount of the refund plus the applicable interest accrued.