Take action now: The 30 June 2020 deadline is fast approaching for foreign Value Added Tax (VAT) refunds to non-EU companies
In these difficult financial times, businesses must find creative ways to increase their revenue and generate immediate cash-flow to support their business continuity. The recovery of hidden VAT can dramatically impact business’ bottom line, as industry estimates suggest that globally around $20 billion of VAT is left unclaimed each year. Many non-European businesses still assume, incorrectly, that VAT charged on purchases from Europe cannot be recovered. However, in many cases purchases with VAT on P-Cards, regular AP transactions for imports, IT equipment, spare parts, personal equipment expenses, travel expenses and cancelled events and hotels is recoverable. The deadline to recover VAT on 2019 expenses from most European countries that allow refunds is approaching rapidly.
The time to act is now
30 June 2020 is a hard deadline for recovering 2019 VAT from most European countries if your business is established outside the European Union. The EU Member States allow businesses in most countries to reclaim EU VAT paid under the EU Directive 86/560/EEC – better known as the 13th Directive. Although it is a pan-European Union law that directs the individual countries on how to structure the application and refund process, there are still specific requirements to take into account and companies may benefit from some simplifications and extensions in this process. VATBox can help you streamline this process to minimise work on your side and maximise your refund.
Who can benefit?
Global companies who operate anywhere in the world outside of the European Union can benefit from this VAT refund process for VAT incurred through regular AP or on business travel expenses from the EU. Also, Switzerland and Norway allow for VAT refunds to non-established companies.
Good to know
France (incl. Monaco):
Due to COVID-19, the Tax Authorities extended their VAT refund deadline under the 13th Directive from 30 June 2020 to 30 September 2020.
The German Tax Authority announced that they would not extend the deadline of foreign VAT refund applications under the 13th Directive; however, they will still accept and process late refund applications if a legitimate explanation is provided detailing why the taxpayer was unable to meet the deadline.
The Slovakian Tax Authority confirmed that they would allow late submissions for foreign VAT refund applications under the 13th Directive until one calendar month after the end of their state of emergency period. The practical meaning of the opportunity is that it will be only applicable if the Slovakian state of emergency continues past the 30 June 2020 deadline.
The Czech Republic has already confirmed that it will not extend its foreign VAT refund deadline under the 13th Directive from 30 June 2020, however, it will allow VAT refund submissions to be sent to the Tax Authority electronically. It is important to emphasize that email submissions will not be accepted.
EU countries originally applying deadlines after 30 June:
- The following EU countries have their deadline on 30 September for the 13th Directive: Belgium, Denmark, Estonia, Greece, Ireland, Italy, Hungary, Latvia, Poland, Portugal, Romania, Spain.
- With respect to Cyprus and the United Kingdom, the deadline for foreign VAT recovery for non- EU-established companies for their spending realised in 2019 is 31 December 2020.
Norway and Switzerland:
Although not members of the European Union, the deadline for foreign companies to reclaim VAT incurred in Switzerland is also 30 June 2020. The Swiss Tax Authority has already confirmed that it will not extend the deadline. On the other hand, the deadline to submit the application to the Norwegian Tax Authority is 30 September 2020.
Saudi Arabia and the United Arab Emirates:
Although not European countries, the deadline for foreign companies to reclaim VAT incurred in Saudi Arabia and the United Arab Emirates is also 30 June 2020.
How to easily meet the 30 June deadline?
VAT recovery is actually quite simple. Get started in 5 steps:
- Be proactive when it comes to cash flow management. Fill out this form to benefit from a free evaluation of your transactional scope. The VATBox Recovery solution will scan, review and process your historical employee-driven and AP transactions to uncover any recoverable VAT.
- Delegate VATBox as your agent to ensure the formal refund process is fully covered, using a simple form.
- Log in to the VATBox portal to find all the audit results, benchmarks for our global data sets and a full drill-down into every single invoice image.
- VATBox will submit all VAT refund claims to the portal on your behalf and attend any tax authorities’ queries.
- Start adding up all the newfound revenue while making data-driven decisions that impact your entire organisation.
We encourage you to act promptly and avoid missing the annual 30 June deadline for reclaiming VAT back from the EU.
VP Tax & Product Strategy
Using his extensive experience as both a tax lawyer and a corporate in-house VAT expert, Remco now leads the VATBox Tax Knowledge team. He is heavily involved in VATBox’ new product developments and leads the VATBox European Headquarters in Amsterdam. Before joining VATBox, Remco led the VAT team of PPG Industries, and at Baker & McKenzie, he advised mainly US clients on how to optimise their European VAT supply chain. He successfully litigated different VAT cases, including a landmark case at the European Court of Justice. Remco holds a Master’s Degree in Taxation, is a certified tax advisor and a regular speaker on tax technology-related topics.