Upcoming deadline for filing applications for foreign VAT refund
By September 30, 2022, businesses can submit applications for a refund of foreign VAT for 2021. The procedure enables those operating on the territory of an EU country to recover input tax incurred in another EU country. As the deadline for submitting the application approaches, we provide below the most important information regarding the refund procedure.
Each business making a purchase in the EU is entitled to submit an application. It must, however, satisfy certain strict requirements, namely:
not have a registered office, a fixed place of business, a permanent place of residence or an habitual place of stay in the EU country where he made the purchase in the country of refund,
be an active VAT payer,
not conduct only VAT-exempt sales, nor make use of the subject-based VAT exemption for small enterprises (in the case of Polish taxpayers, provided for entities whose sales did not exceed PLN 200,000).
Furthermore, the applicant may not, in the period of refund, perform sales in the territory of the country of return (with some exceptions).
Goods/services on which a refund may be obtained
The refund application relates to the purchase of goods or services and the imports of goods during the refund period for which the applicant would have been entitled to deduct VAT in the Member State of refund under its national legislation. VAT can be refunded on goods and services such as:
the purchase of fuel
the lease of means of transport,
other expenses related to means of transport,
road tolls and other charges related to the use of roads,
travel costs (taxi fares, public transport),
costs of food, drink and restaurant services,
entrance fees for fairs and exhibitions,
expenditure on luxury goods, amusements and entertainment,
other purchases (mainly tools, parts, repairs and office supplies).
Note that where the taxable amount on the invoice or import document is EUR 1,000 or more, or the equivalent in the national currency, the Member State may require the submission of documents proving the purchase of the goods or services. In cases where the invoice concerns fuel, the threshold is EUR 250 or the equivalent in the national currency.
Period and amount of the reimbursement claimed
The maximum period for which an application may be lodged is the calendar year. In such a case, the amount of VAT to be refunded may not be less than EUR 50 (or its equivalent in the national currency).
Applications may also be filed for periods shorter than the calendar year, but not shorter than three months, with the minimum amount to be refunded being EUR 400 (or its equivalent in the national currency).
By way of exception, as it were, applications for periods of shorter than three months are also allowed - where they concern the remaining part of the calendar year, which is less than three months long (e.g. for November - December 2021). The minimum amount of VAT refund requested in this case is also €50 (or its equivalent in the national currency).
Filing the application
The application for a VAT refund from another EU country is lodged in the applicant’s country of residence, via electronic means of communication. Then, the application is sent to the tax authority in the country of destination of the refund.
In the case of applications filed in Poland, the electronic form (VAT-REF) is submitted via the e-Deklaracje system to the head of the tax office relevant to the place of performance of the taxable activities.
The Member State will notify the applicant of whether the application has been accepted or rejected within:
4 months from its receipt by that Member State,
2 months from the date of receipt of any additional information requested, but no less than 6 months from the date of receipt of the application by the Member State of refund,
8 months from the receipt of the application by that Member State, where the Member State of refund requests further additional information
Reimbursement will be made no later than within 10 working days after the expiry of the above deadlines. In the event of delay on the part of the authority, the applicant will be entitled to default interest.
Incidentally, it should be noted that in Poland tax refunds may also be granted to eligible entities from third countries, if they fulfil certain statutory conditions (such entities being active VAT taxpayers and, as a rule, not making sales on the territory of the country in the period for which the tax refund is sought). Quite importantly, the tax refunds to eligible entities from third countries are granted on the basis of reciprocity, i.e. an analogous right must be granted to Polish entities making purchases in such countries. The third countries whose businesses may apply for a VAT refund in Poland currently include: Iceland, Macedonia, Norway, Switzerland and the United Kingdom.
The refund procedure for businesses from these countries is, in principle, analogous to that for entities from Member States. However, it should be noted that in the case of entities from third countries applying for a VAT refund in Poland, the application should be filed directly with the Head of the Second Tax Office for Warszawa-Śródmieście.
Should you need assistance with your application, please contact our experts!
Kinga Duszna, Tax Consultant, ATA Tax Sp. z o.o.