A review of VAT refund procedures for businesses located in the European Union has been launched to assess if they are compliant with EU law and Court of Justice of the European Union case law. The review, which began on the 8th March, will run for 8 months and will scrutinise the ease with which businesses are able to recover VAT credits both in their own country and in other EU countries.

The European Commission has identified that a lack of access to a simple and fast VAT refund procedure has a major impact on cash flows (especially for small businesses) and on the competitiveness of those businesses.The tax provisions in each member state will be assessed and non-compliance with the rules could well launch infringement procedures against member states for breaking the rules.

Of particular interest to the study will be the length of time necessary to finalise refund procedures in each country as well as any unwarranted burdens in the system that may create financial risks for business. Currently, there are no uniform arrangements within the EU, with some states refunding on a month by month basis and other states forcing businesses to wait for 21 months before being able to actually submit a claim – and waiting 12 months or longer for the money to be refunded.

The review forms part of the EU Commission’s plan for a single VAT area which aims to provide a consistent approach to VAT refunds throughout the 28 member states in order to reduce administrative burdens for micro-businesses and SMEs.


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