Companies based in the European Union (EU) can recover value added tax (VAT) on purchases from countries other than where they are established. The deadline for reclaiming VAT is 30 September 2023 for invoices dated 2022.
With five days to go, Richard Haye, Director of VAT Reclaim at Ryan, a leading global tax services and software provider, explains the cost benefits of making a successful claim.
“VAT rates vary significantly across EU countries, with standard rates ranging from 16–27% and reduced rates starting from 2.1% and going up to 18% depending on the country and the type of goods being purchased. This presents a huge opportunity to businesses that make large volumes of purchases abroad—as long as they claim the VAT back correctly and on time.”
When submitting a claim, Haye outlines three key challenges that businesses should be aware of that the tax authorities will respond to claims in their local language and method that may be unfamiliar to the claimant.
Some transaction types can create a registration liability, adding the burden of additional administrative work and associated compliance costs.
Inspectors handling the claims often pose additional questions or identify reasons to reject the claim, extending the processing time, thereby requiring additional effort and resources to address the inquiry.
Haye added, “Especially in today’s economic environment, it’s important that businesses understand the VAT repayments that they are entitled to.
“If you haven’t started the process, you’ll need to move quickly to gather all the information needed and to complete the application form from the relevant country’s tax authority. Alternatively, seek advice from a tax specialist who can process your claim on your behalf.”