2011 EU VAT reclaims deadline

EU businesses looking to submit VAT refund claims to recover VAT suffered in foreign EU Member States are reminded of the 30 September 2012 deadline for 2011 year items. Any 2011 claims submitted beyond that date will not be accepted by the particular EU country tax authorities concerned. Traditionally since the introduction of the 8th Directive (79/1072/EEC) in January 1981, the deadline was absolute with no exceptions. This principle was recently reinforced when the ECJ adjudged a ruling to Italy that the deadline was inviolable and mandatory.

EU businesses submit 8th Directive refund applications to any of the other 26 EU Member States at their VAT rates. The claim has to be a valid entitlement under the principles of EU VAT neutrality within the relevant country’s local rules on deductibility.

Up until 2009, EU VAT claims were made direct, but mostly through professional VAT recovery agents. Foreign refund application forms could be administratively complex, and were usually in the local language. Many companies making claims themselves came to grief through technical errors and a frustrating inability to communicate with the foreign tax authority.

In 2010, a new electronic system was introduced EU-wide, making it simpler for businesses to submit their cross-border claims. On-line application is made through the company’s home country tax office, who in turn communicate it to the foreign countries concerned. This apparently straight-forward process has led many companies to submit claims themselves.

While this has proved successful for simple claims, some recovery applications fall on stony ground. If the foreign refunding tax authority decides to ask questions, then contact will be made direct with the business, and not with its home tax office. This can lead to communication and language difficulties, coupled with demanding time deadlines. Where, for example, original invoices require to be physically posted along with other supportive documents, all sorts of potential pitfalls arise, increasing the likelihood of a technical knock-out, resulting in complete rejection of a perfectly valid claim. In many cases, there are no means of redress. For higher value complex claims, therefore, companies may feel it prudent to employ a professional agent with local representative offices across Europe.