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VAT refund process for companies with local VAT number

Companies operating in several countries and with a local VAT number generally obtain the refund of VAT on their local expenditure by including those in their local VAT return.

Although this approach is commonplace, it requires a rigorous understanding of the procedures and regulations in order to avoid the obstacles that the local tax authorities will put in your way in an attempt to avoid refunding anything.

Our firm suggests that you adopt a four-phases strategy designed to optimize your VAT refunds abroad.

Is the VAT refund automatically authorized by the tax authorities?

The first question to consider is whether VAT refunds in the country in question are automatic or whether they have to be requested.

In some EU countries, such as Germany, Ireland and the Netherlands, refunds are processed automatically as soon as the VAT return shows an amount due. However, in other countries such as France and Belgium, the VAT credit is carried forward to the next period unless an explicit request for a refund is made. It is then up to the business to take the necessary steps with the local tax authorities to recover these funds, and the procedures can vary significantly from one country to another.

How long does it take for VAT to be refunded?

The time taken to obtain a VAT refund can vary considerably.

In some European countries, where the process is automated, the refund is generally credited to the bank account within a month. However, in countries where a formal application is required, timescales can differ significantly. In Spain, for example, refunds may only be made once a year, with some exceptions. This can be problematic, particularly if the tax authorities decide to carry out an audit before approving the refund.

It is therefore crucial to find out about the specific features of the repayment process in each country so that you can manage your expectations and cash flow as effectively as possible.

Can you claim interests for late repayment?

The tax authorities systematically carry out a preliminary examination of VAT refund applications in countries such as Poland, Hungary, Romania and Bulgaria. These tax audits can lead to lengthy administrative procedures, prolonging refund times, sometimes excessively.

Businesses often have to be extremely patient, sometimes for several years, to recover VAT. In the event of excessive delays, the Court of Justice of the European Union recognizes the right of businesses to claim interests. However, the interest rate applicable and the procedure to be followed to obtain these interests differ from country to country.

Have you provided a valid bank account?

The tax authorities will refund the VAT to your bank account. However, they will need to have your bank details. Before submitting a request for reimbursement, you should therefore make sure that your bank details have been entered correctly using the procedure provided for in the country in question and, above all, that these details are still valid. Otherwise, the bank transfer will be refused.

Some countries, such as Poland, still require you to open a local bank account.

The VAT expert's eye

If you've had no news of your foreign VAT refund claim for months, it's likely that your credit is stuck in red tape. Without determined actions, there's a real risk that you'll never get your money back.

By adopting our structured strategy and partnering with your business, you can optimize your foreign VAT refunds and improve your cash flow. Our expertise and in-depth knowledge of European VAT regulations guarantee personalized support and a rapid refund.

Why Choose European VAT Desk for Your VAT Needs?

Choosing the right tax advising firm is crucial for optimizing foreign VAT refunds. Here are several reasons why one should consider a specialized firm like VAT Desk:

  • Expertise in intra-EU trade regulations and VAT compliance, ensuring accurate reporting and maximization of VAT refunds.
  • Assistance with preparation and submission of local VAT returns to avoid penalties and fines.
  • Tailored solutions for VAT registration in Europe including direct registration, fiscal representation, or simplified schemes.
  • Comprehensive VAT consulting services, including risk exposure analysis, error detection, and audit preparation.

We offer a free video conference to assess your situation and provide you with a tailored solution.