EU to EU VAT refund claims

The process for EU to EU VAT refund claims fundamentally changed from 1 January 2010.  This system is for a business established in one member state to claim the VAT back on business expenses incurred in a different member state.  The following are the main characteristics of the new system:

• The new system is electronic and not manual as was the case under the previous system.
• The claim has to be submitted to the tax authority in the business’s Member State of Establishment (MSE), not to the authority in the Member State of Refund (MSR) as was the case previously.
• The claim will however still be dealt with by the authority in the MSR under the tax rules therein. 
• Claimants will have 9 months (instead of 6 months previously)  to submit claims in respect of VAT incurred in the previous calender year.
• Once the MSR receives the claim it must process the claim within 4 months and repay within 10 days of approving the claim.  If the MSR requires further information before it can approve the claim, the period can be extended to a maximum of 8 months.  If these time limits are not met by the MSR it will have to pay interest on the claims.  This represents a much needed improvement as previously some MSR authorities would simply not respond at all after a claim was submitted.

However there are certain obligations on the claimants also under the new system such as:

• Claimants must respond to queries raised by MSR within one month.
• Queries raised by MSR can be in the language in MSR and must be answered in that language.
• Claimants may be asked to provide copies of invoices to justify the claim.
• Queries by MSR can be sent by email or post directly to the claimant or via the MSE so businesses must be vigilant not to miss the communication and the response deadline.

RKG Consulting will be pleased to assist businesses across the EU in respect of cross-border EU to EU VAT claims and in dealing with the requirements of the new system on behalf of claimants.