Refund of input tax in the EU

Next September 30th is the deadline to request the refund of VAT paid in other European Union countries.

Although to a large extent Value Added Tax (VAT) is a tax that is harmonized at the European Union (EU) level, and a general framework of rules and minimum rates has been established to avoid distortion of competition between EU countries, on occasion, due to the rules for locating the taxable event for VAT, transactions carried out between entrepreneurs established in different EU countries are recorded at the VAT rate of the country of residence of the person delivering the goods or providing the service.

This means that the company resident in the other country cannot deduct the input VAT as it would normally do with the rest of the usual operations. In other words, VAT paid outside Spain cannot be included in the periodic returns filed in our country (form 303), since these only include the tax paid/supported in Spain.

This would be the case, for example, if a company established in Spain participated in a fair in Belgium and had to pay Belgian VAT on its invoices for stand rental, transport costs such as taxi or car rental costs, fuel, accommodation… Well, this Belgian input VAT could be recovered and therefore not cost the company anything.

This possibility of recovering VAT paid on commercial activities carried out in another EU country is provided for in Article 117 bis of Law 37/1992, of 28 December, on Value Added Tax, and developed in Article 30 ter of the Value Added Tax Regulations. The form used to process this VAT refund is form 360, which is available at the Electronic Headquarters of the Tax Agency and must be submitted by electronic means via the Internet.

In the form, you must include the identification data of the requesting company, as well as that of the supplier(s) with whom you have maintained the commercial relationship for which VAT has been paid other than in Spain. Additionally, the information on each invoice must be detailed individually (date, taxable base, VAT rate and concept). It is important to always keep a copy of the invoice, because, even if they do not appear in the VAT register books to be provided to the Tax Agency, in this refund application procedure a copy of the same routes must be sent online.

Certainly, it is a relatively simple process, but there are some aspects that must be taken into consideration:

• The refund period may not exceed one calendar year and may not be less than three calendar months.
• If the refund application relates to a quarterly period, the amount of VAT indicated in the refund application may not be less than EUR 400 or its equivalent in national currency.
• If the refund application relates to a refund period of one calendar year or to the remaining part of a year, the amount of VAT may not be less than EUR 50 or its equivalent in national currency.
• An application must be submitted for each country to which it is addressed, i.e. one for each country in which VAT has been paid.

After receiving the application for refund of VAT paid in the EU, the tax office will forward it to the country in which the tax was paid and that country will process the refund or, where appropriate, request additional information.

On the other hand, a prerequisite for filing form 360 is that the applicant must be a member of the Secure Telematic Notification Service, the specific procedure for managing VAT refunds to non-residents, and must subscribe to the procedure that is carried out from the Electronic Notification Service portal.

Finally, it should be mentioned that the deadline for the submission of the refund application will begin on the day following the end of each calendar quarter or each calendar year and will end on 30 September following the calendar year in which the payments to which it refers have been made. This September would therefore mark the end of the period for applying for input VAT in different EU countries during the year 2018.