EU Streamlines VAT Refund Process for Businesses in 2024

Starting in 2024, EU businesses can claim VAT refunds across the bloc, simplifying the process and fostering a more integrated single market. The new streamlined system aims to reduce administrative burdens.

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Trim Correspondents
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EU Streamlines VAT Refund Process for Businesses in 2024

EU Streamlines VAT Refund Process for Businesses in 2024

Starting in 2024, taxable persons established in the European Union (EU) will be able to claim VAT refunds under the 8th Directive for VAT paid in another EU member state. The new process, which is subject to specific criteria, involves electronic applications and strict deadlines aimed at simplifying the VAT refund procedure for EU businesses.

Under the 8th Directive, the streamlined process allows EU taxable persons to reclaim VAT expenses incurred in jurisdictions where they are not VAT registered. To be eligible for the refunds, the taxable person must meet certain requirements, such as not having a fixed establishment or supplying goods/services in the member state of refund.

The refund application must be submitted electronically by September 30 of the following year, covering a period of at least 3 months but no more than 1 year. The member state of refund has 4 months to review the application and approve or refuse it. Refunds must be paid within 10 working days of the 4-month deadline. There are also specific requirements for the minimum refund amount and documentation to be provided.

Why this matters: The streamlined VAT refund process under the 8th Directive is part of the EU's efforts to harmonize the corporate tax base across the bloc. This change aims to simplify the procedure for EU businesses to reclaim VAT expenses incurred in other member states, reducing administrative burdens and fostering a more integrated single market.

The European Council discussions also touched on the capital markets union and the need for further integration and supervisory structures. Ireland has pushed back on proposals for more centralized control, with the immediate focus being on the level of supervision and associated red tape to be handed over from national regulators to EU-wide bodies. The conclusions highlighted the ongoing work to be done in this area.

Key Takeaways

  • From 2024, EU businesses can claim VAT refunds under the 8th Directive.
  • The new process involves electronic applications and strict deadlines to simplify refunds.
  • Eligible businesses must meet criteria like not having a fixed establishment in the refund state.
  • Refund applications must be submitted by Sept 30 and processed within 4 months.
  • The EU aims to harmonize the corporate tax base and reduce administrative burdens.