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EU VAT 2009 refund deadline delayed to Mar 2011

  • Jul 12, 2010 | Richard Asquith

EU VAT 2009 refund deadline delayed to Mar 2011

The European Union Commission has today announced that the deadline for the submission of company EU VAT refunds incurred in 2009 has been postponed from September 2010 to March 2011. This delay reflects the huge challenges and confusion the 27 EU member states have incurred in trying to implement Europe's new foreign VAT recovery electronic mechanism.

As part of the wide-ranging 2010 VAT Package, each member state was charged with building a VAT recovery online portal for their companies to process foreign VAT reclaims. This was to replace the previous system, which required businesses to complete separate paper returns for each country where they had incurred foreign VAT, and submit them directly to the relevant tax authority. The new regime would allow companies to file one return to their own tax authority through the local portal, and the tax authority would then pass on the claims to each appropriate country. Underpinning the new system was the aim of improving the free movement of goods and services within the EU, and reducing the costs for companies of trading across borders.

However, the launch of the 27 new portals has proved hugely troublesome. Issues include:

  • A number of countries did not launch their portals until the second quarter of 2010.
  • Many portals have been unable to perform simple calculations to reliably estimate the tax refund.
  • In some countries, with VAT grouping arrangements, it is not possible to register subsidiaries of groups - only the holding company.
  • Few countries confirmed receipt of VAT reclaims.
  • Whilst there is a facility to amend claims in most portals, these are not always being passed onto the relevant countries.

Today's move by the Commission is an admission of the above difficulties. It has also agreed to intervene in the design and technical operation of the portals to try and establish some level of conformity.

The process for non-EU companies reclaiming VAT remains unchanged.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara