VAT News
Press Release by the European Commission 15 July 2010:
The Commission safeguards taxpayers' right to VAT refunds
Today the Commission adopted a proposal to postpone the deadline for the submission of VAT refund requests related to 2009. In view of the late implementation by Member States of the new VAT refund procedure, which came into force on 1st January 2010, the Commission proposes giving more time to taxpayers to introduce their requests for VAT refund. At the same time, the Commission proposes harmonising some features of the national VAT refund web portals in order to make them more interoperable and accessible for taxpayers.
The VAT Refund Directive came into force on 1st January 2010 and allows for the refund of VAT on business expenses incurred by taxable persons in a Member State in which they are not established. It introduces an electronic system by which the taxable person submits his application for a refund via a web portal developed by the Member State in which he is established. Member States were obliged to make this web portal available on 1st January 2010.
However, some Member States were late in launching their web portals, whilst others have had a number of technical problems in getting them up and running. This has led to a situation in which taxable persons have not been able to submit their refund applications.
Because of these delays, and in order to safeguard the taxpayer's right to deduct VAT, it is necessary to postpone the deadline for submission of refund requests for 2009 expenses from September 2010 to March 2011.
In addition, because Member States have diverging views on the technical operation of the Directive, it is necessary to set up an efficient mechanism to harmonise certain detailed requirements in this area. For this purpose, the Commission proposes that it is granted with the power to adopt – subject to the positive opinion of the Standing Committee for Administrative Cooperation - the technical provisions that are necessary for such a pan-European scheme to be fully interoperable.
Background
The VAT Refund Directive replaced the paper procedure for VAT refund requests which had been set out in legislation dating back to 1979. Under the previous paper procedure, taxpayers had to send original invoices to all Member States in which they incurred VAT in order to receive a refund. The new Directive aims to simplify this process and to reduce administrative burden, by introducing an electronic procedure by which the taxpayer introduces a single refund request in his Member State of establishment.
Some of the national web portals were opened very late (mid-May for the last one) and numerous complaints have been received from business pointing to divergences between the different Member States on some of the technical details relating to the practical operation of the national web portals. Several initiatives have already been taken by the Commission to agree with Member States on improvements in this area, but under the Directive the design of national web portals is entirely of the responsibility of each Member State. The Commission has strongly urged Member States to make their web systems fully operable as quickly as possible, in order to minimise negative impacts on businesses.
The text of the proposal can be found under the following link:
http://ec.europa.eu/taxation_customs/index_en.htm
July 2009:
Changes in EU VAT refund application process from 2010
From 1 January 2010 it is planned that the current paper-based refund procedure for VAT incurred by EU businesses in Member States where they are not established, will be replaced by a new, fully electronic procedure. Business will be able to submit claims up to nine months from the end of the calendar year in which the VAT was incurred, instead of 6 months as at present (30 September deadline rather than 30 June). Interest will be paid if Member States are late making refunds.
July 2009:
Estonia - With effect from 1 July 2009 the standard VAT rate has been increased from 18% to 20%. The hotel VAT rate was increased from 5% to 9% effective 1 Jan 2009.
Hungary - With effect from 1 July 2009 the standard VAT rate has been increased from 20% to 25%. The hotel VAT rate was decreased from 20% to 18%.
Great Britain - It has been announced that the standard VAT rate of 15% (applicable from 1 Dec 2008) will go back to previous rate of 17.5% from 1 Jan 2010.
June 2009:
Poland - Interest on delayed VAT refunds to foreign entities
After many formal complaints to the Polish authorities and the EU Commission regarding the long delays in processing the foreign VAT claims under the 8th and 13th VAT directive, we are pleased to inform you that the Supreme
Administrative Court
in
Poland
has commented in a recent case that a foreign company is entitled to default interest if the VAT refund it is entitled to is delayed.
CB will review the process for applying for interest and assist all clients with relevant claims.
22 April 2009:
German Signature Requirements Update - Following on from our formal complaint to the Commission, the Commission has decided to open infringement procedures against Germany regarding their interpretation and implementation of the German Signatory Requirements. This is very good news. We will keep you updated as and when the procedures progress.
April 2009:
Ireland - With effect from 1 Dec 2008 the standard VAT rate has been increased from 21% to 21.5%.
Jan 2009:
Latvia - The standard VAT rate increased from 18% to 21% from 1 Jan 2009. The reduced VAT rate increased from 5% to 10% from 1 Jan 2009.
Lithuania - The standard VAT rate increased from 18% to 19% from 1 Jan 2009. No changes to reduced VAT rates.
Autumn 2008:
Interest to be paid on delayed refunds from Germany:
The German Supreme Tax Court have ruled that the authorities have to pay interest on 8th and 13th directive claims. This interest in the meaning of para 233a General Tax Code is 6% per annum (0.5% per month) and is incurred for full months beginning from the 15th month following the end of the calendar year in which the VAT refund claim arose. I.e. for a claim with invoices dated in the year 2006, interest will be calculated 15 months from the end of calendar year 2006 (regardless of whether the claim was submitted during 2006 or anytime upto June 2007). So for invoices submitted in 2006 interest will be calculated on
refunds materialising
after 1 April 2008.
It is still unclear what period of limitation applies , Cash Back assume it is one year, ending on 31 December of the year after which the assessment was made. This would mean that for decision notices received in 2007, the authorities must be notified about the interest claim until 31 December 2008.
Cash Back
are consequently applying for interest on all appropriate files by 31/12/2008. At this time, it does not appear that we need any further administrative documentation in order to proceed. We will advise you individually of the results . Note these interest claims will be denoted with the letter “I” following the relevant claim number on your Claims Status Reports .
Autumn 2008: German Signature Requirements:
The German Supreme Tax Court has decided to refer a case to the ECJ which questions the requirement for Eighth Directive refund claims submitted to the German tax authorities to be signed by the taxpayer or, for a legal entity, by the legal representative (the signature of a tax adviser or of an employee of the taxpayer not being sufficient). This referral will have important implications for all businesses seeking both Eighth Directive and Thirteenth Directive VAT refunds from Germany.
Background:
As many
will have noticed, since 2007 the German Federal Tax Office have scrutinized the signatures on refund claim forms, and in many cases rejected claims as being formally incomplete. According to the FTO - the "legal representative" had to sign the form. "Legal representative" in this sense are Board Members, as - from a German company law point of view - only the Managing Directors (Geschaeftsfuehrer or Vorstand) of a company are "legal" representatives by their function. Anybody else, e.g. "Prokuristen" or tax directors, are just "appointed" representatives. Consequently forms signed by the tax directors of foreign companies have been rejected, even if the CEO produced a confirmation that this person was properly appointed to sign all tax returns on behalf of the company.
Appeals against these rejections have been unsuccessful. The Tax Court of Cologne (in charge of all appeals lodged against the FTO) held that German procedural law required the claimant, if a legal entity, that its legal representatives signed the forms. In some cases, where these decisions were appealed against, the Supreme Tax Court supported that view. However the common opinion is that the 8th Directive does not require a "personal" signature; and b) the German interpretation of the Directive violates the principle of proportionality.
Implications: This referral to the ECJ has important implications for all businesses seeking both Eighth Directive and Thirteenth Directive VAT refunds from Germany. Be assured that if a VAT claim has rejected by the German tax authorities on the grounds of lacking an appropriate signature, Cash Back has lodged an appeal against this decision and asked that the decision is postponed until the case at the ECJ and Supreme Tax Court is decided.