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How to get the most out of a VAT refund

Dec 9, 2022 | European VAT, Tax & Accounting

All About VAT Refund: Facts That You Need To Know

Most businesses who incur VAT in connection with their activities in the country where they do not habitually supply goods/services (and so are not required to register for VAT) are nevertheless entitled to deduct that VAT. 

In this blog, you will learn useful information about the rules and methods to claim your VAT refund. You will become aware of why VAT refunds are not allowed and why. Furthermore, this blog enlightens us about how to claim VAT refunds. We will provide better services related to registration and tax submission or refund schemes and assist you in growing your business.

Vat Refund
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VAT Refunds for EU businesses 

VAT may apply in part or in full to all charges, deposits, and fees made to deliver goods or services.

VAT is due if you withhold (in full or in part) payment for goods or services that the consumer rejects. If the deposit is not paid in full, the payment cannot be reclassified and is not, thus, eligible for VAT exclusion.

It demonstrates how to pick the best alternative for your company.

Additionally, it outlines policies that apply to all of our plans, such as how to record your Daily Gross Income (DGT), what to do if VAT rates change, and what to do if you decide to stop using a retail plan, as well as guidelines for particular scenarios, such as those involving food supplies, retail items made by chemists, and supplies from florists.

When can you claim a VAT refund?

For instance, you can be eligible for VAT if you give refunds to your clients for returned, useless things and if you are charged VAT for your business in an EU country where you are not located, and the government of that country reimburses you for that VAT. You can typically claim VAT from the local tax authorities if you are charged VAT in an EU member state. 

You can use any system of the following two systems: 

  • 13th Directive process
  • EU VAT refund system
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When is a VAT refund not allowed, and why?

The reverse charge system exempts shipments and additional services or inputs from customers who are required to pay the relevant VAT. However, to be eligible for a refund under this method, the company cannot be located in or provide goods or services in the EU country of the refund during the refund period. 

Another reason for not allowing the refund is that when a creditor:

  • Not considered a taxpayer for VAT
  • Produces exclusively tax-free supplies; no deductions allowed

Furthermore, you cannot use the system to recover VAT if:

  • Non-commercial inputs, but VAT may be levied on the commercial component of the product if delivered for commercial and non-commercial use.
  • All supplies used or to be used in the manufacture of supplies in the UK.
  • Delivery or importation of most commercial vehicles, only 50% of the VAT on rental cars for mixed commercial and private use is allowed.

How to claim your VAT refund?

You must submit an online application for a VAT refund to the government of the nation where your company is based. The authorities will submit your claim to the authorities of another nation if you are eligible for reimbursement.

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At the EU level, the VAT return process has been harmonised. The duties of the Internal Revenue Authority are described in the summary of the VAT refund procedure.

Application form

You can fill out the application form on our website to request a VAT refund for your business. You can find out when your application was received from HMRC. Within four months of that date, we will inform you if your application was accepted or denied.

Additional information may be requested, such as the original invoices or other papers. After receiving the request, you have one month to supply this information.

From the time we receive your application, we have up to 8 months to notify you of our choice.

When will you receive the payment?

You will receive the money within ten days of the specified decision deadlines, barring rejection of your application. Payment will be created to the bank account specified in your application in pounds sterling.

If your application is rejected

If your claim is denied, HMRC will explain why.

If you disagree with the choice, you can:

  • File an appeal with an impartial court 
  • Request a review from HMRC personnel who have not taken part in the decision-making process 
  • If you choose a review, you can still file an appeal with the court after the review.

Within 30 days after the decision letter’s date, you must send a letter to the address provided requesting a review, outlining your reasons for doing so.

VAT refund for non-EU businesses 

If your organization is not based in the EU and you are charged VAT for commercial operations there even though you have not provided any products or services, you may be entitled to a refund from the local government. For instance, a Swiss corporation that attends a conference in Belgium is charged BE VAT on its lodging bill.

How to claim your VAT refund

You must submit your application for a refund to the authorities in the EU nation where the VAT was incurred. Some EU nations will only issue you a refund if the nation in which your company is based provides comparable refund policies for firms from that nation.

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Frequently asked questions

  • Will I get 100% VAT refunded?

    Improbable. There will always be an administrative fee associated with the service..

  • Where can I complain if I did not receive the refund?

    You can file a complaint with the business where you purchased it because it is their primary duty to issue the refund. In contrast, you may apply to the intermediary first if that company used one. In specific instances of VAT refunds to foreign visitors, the European Commission does not get involved. Tax-free stores and eligible products comprise “tax-free shopping.”

  • If I leave the country, then what is the process?

    Bring the goods and the paperwork to the border post and have the local customs officers stamp the paperwork before you exit the EU or the nation where you purchased the items.

Conclusion 

In conclusion, it is necessary to attain complete guidance before claiming your VAT refund as it can lead to making effective decisions and steps to excel in purchasing and buying goods. If you are qualified to utilise the EU VAT refund system but cannot do so, contact HMRC or review the guidelines for more details. We will assist you in growing and spreading your business with our best services for tax submission and tax refunds. You can visit our site Sterlix Global for further details. 

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