Reciprocity and VAT Legislation
Value Added Tax (VAT) or a similar tax is charged in over 130 countries. In the European Community a common VAT system was initially provided for under the 2nd Council directive in 1967. This was advanced significantly by the adoption in 1977 of the 6th VAT directive.
In 1982 the decision was taken by the EU (then EEC) that companies within the EU should be able to compete on equal terms. VAT refunds are therefore available to EU companies on the same service charges which local businesses are able to deduct on their local VAT declarations (8th VAT Directive, legal document 31979L1072 issued 6 Dec 1979).
In 1988 the 13th VAT Directive (legal document 31986L0560 issued 17 Nov 1986) was implemented allowing companies outside the EU to reclaim their VAT within the EU. Refunds may be conditional to reciprocity being granted.
In February 2008 the new council directive 2008/9/EC was adopted changing the procedure and rules under which companies within the EU should reclaim their foreign VAT as from 1 January 2010.
The specific rules of VAT recovery vary from country to country as there are many differences in the implementation of the directives. Contact your Cash Back office for assistance.