VAT REF – refund of foreign VAT in Poland

September 6, 2021

September 30th, 2021 is the last day on which entrepreneurs can submit an application for a refund of foreign VAT for 2020 will pass. The so-called VAT-REF allows people running a business in the territory of an EU country to recover value added tax from another country of the European Union. Who can apply for a VAT refund? What conditions must be met to get it? And what is the VAT-REF basically? You will find out about this by reading this article. Enjoy your reading!

What is the purpose of the VAT-REF?

Entrepreneurs very often buy abroad. When purchasing certain goods or services, such as fuel, accommodation or food, the taxpayer is not entitled to deduct VAT in the declaration submitted to the Polish Tax Office. This is when the VAT-REF comes in handy – according to, inter alia, agreement on the avoidance of double taxation, it allows you to apply for a refund of value added tax. Thanks to it, entrepreneurs have the right to recover VAT paid in another EU country. Given that there are countries where taxes are as high as 27% (such as Hungary), this mechanism is very beneficial.

Who can apply for a VAT refund?

Any entrepreneur purchasing within the EU is entitled to submit a VAT-REF application. However, he or she must meet strictly defined conditions, that is:

• cannot have a seat / fixed place of business in the place where business transactions were made,
• cannot have a place of residence / permanent residence in the above-mentioned country,
• cannot provide services or goods (with exceptions) in the country from which the refund is sought.
• is a taxpayer within the meaning of Article 15 of the VAT Act,
• its sale is not exempt from tax pursuant to Art. 113 of the VAT Act, nor does it perform only tax-exempt activities (with exceptions)

The above requirements result from Article 3 of the European Council Directive 2008/9 / EC and Article 89 (1h) of VAT.

Which goods / services can be refunded?

VAT refund from another European Union country is possible in the case of goods/services such as:

• fuel,
• food,
• rental of means of transport and other services or goods related to transport, such as parking fees or repair costs,
• costs of participation in exhibitions, fairs, etc.
• miscellaneous entertainment, luxury and entertainment expenses,

Please note that you must have a document confirming the purchase of goods or services. It can be, for example, an invoice. Some Member States may request such a document.

Procedure for submitting the VAT-REF application

We do not apply for a VAT refund from another EU country directly in that country – we do it online at the Tax Office appropriate for the place of business, from where it will be sent to the tax authority in the destination country. As mentioned above, the deadline is September 30. The application itself should cover a period of not less than 3 months (unless it concerns the last three months of the tax year). In Poland, we submit it using the e-Deklaracje system.

If we submit an application which relates to a period longer than 3 months, but shorter than the tax year, the amount of VAT refund may not be lower than the equivalent of EUR 400 in Polish currency. In a situation where the application concerns the entire tax year or a period shorter than the last 3 months of that year, the aforementioned amount may not be lower than EUR 50.

After receiving the application, the Polish Tax Office has 15 calendar days to transfer it to the appropriate country. The target country has 4 months to accept or reject the application, unless additional information is required. In this case, the Member State has 6 months to make a decision, and if it requests further clarifications, this time is extended to up to 8 months.

As you can see from the above article, VAT-REF makes it quite easy to recover value added tax paid in another country. This is a great help for entrepreneurs, especially considering the fact that the entire procedure can be performed from home, using a computer and the Internet.

Author: Patryk Orszulak

Tags vat ref