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VAT refunds from another EU member state

Czech Republic: VAT refunds from another EU member state; time periods for filing and processing applications for refunds; circumstances which may lead to the denial of refunds

VAT payers who are incorporated or have a permanent establishment in the Czech Republic and who pay VAT in another member state may ask for a refund, subject to the conditions set out in Sec. 82 of the Czech VAT Act. Such applications must always be filed through the electronic portal administered by the General Finance Directorate. Tax payers are granted access to this portal by their locally competent finance office.

Once the electronic application for a VAT refund from another EU member state has been filled in and submitted, it will first be reviewed in the applicant's home country (i.e., in this case, the Czech tax administration) to check whether the applicant is indeed a VAT payer, and whether they do not only render performances which are exempt from tax and give no rise to a claim for refunds. If the application has been found faultless in this respect, it will be passed on to the country from which the refund is sought, and that country will promptly notify the applicant in electronic form of the fact that it received their application. As of that moment, a time period of four months (as per Article 19 (2) of Council Directive 2008/9/EC) after which the member state of refund will notify the applicant of its decision as to whether it approves or refuses their application. During this period, the member state of refund may ask for supplementary information (e.g. the presentation of originals or copies of the relevant invoices, import documents, etc.). This supplementary information must be provided by the applicant within one month from receiving notice that they are asked to do so. If the application for a refund is approved, the member state of refund will pay the approved amount of tax within ten working days from the lapse of the above-mentioned time period pursuant to Article 19 (2) of the Directive. If the application is refused (whether fully or in part), then the grounds for refusal will be notified by the member state of refund to the applicant together with the decision on the refusal. In such a case, the applicant may appeal the refusal of their application before the relevant bodies of the member state of refund (finance office, courts, chamber of commerce). A typical reason why a particular application may be refused is that a category of VAT has been claimed which is not eligible for refunds in the given country. In Germany, for instance, it is not possible to claim refunds for VAT on fuel for personal cars, refreshments, gifts, and advertising expenses.

In closing, we may add that the application for a refund is to be filed no later than by 30 September of the calendar year following the period for the tax refund, i.e., a claim for 2016, for instance, may be filed until 30 September 2017. One may also request a shorter refund period of three calendar months. In such a case, the limit for refundable VAT is EUR 400. For applications for the entire calendar year, the limit is EUR 50. Failure to observe these limits (i.e., an application for an amount below these limits) may lead to the request being denied.

Source: Act No. 235/2004 Coll., on value-added tax (Sec. 82) Council Directive 2008/9/EC Finance administration – tax portal