Refunding of input tax within the EU – Warning: non-extendable deadline expiring on 30 September 2018!

10. August 2018

VAT paid abroad may not be deducted by an entity as input tax in its VAT return in its country of residence. The system of refunding input tax ensures that there is no cost factor.

Some services that an entrepreneur procures from abroad will be invoiced with foreign VAT. Two specific examples:

Example 1:
The Austrian businessman NÖ spends the night at a hotel in Milan. The hotel issues a bill for the stay includingItalian VAT. However, NÖ may not deduct the Italian VAT billed as input tax in his Austrian VAT return.

Example 2:
The Slovenian haulier LJU refuels the company truck in Carinthia. Austrian VAT is shown on the invoice. LJU may also not consider the Austrian VAT in Slovenia as input tax.

In both cases the invoiced VAT, which is not deductible in the respective country of residence, would become a cost factor. In order to ensure fair competition, there is therefore a system of refunding input tax.

Foreign entrepreneurs based in an EU Member State and without a permanent establishment in Austria (Example 2) can submit their refund requests for Austrian input tax for the year 2017 via the electronic portal provided by their respective Member State of residence until Sunday 30 September 2018. Foreign entrepreneurs must

  • not have earned any revenues in Austria, or
  • only tax-free revenues pursuant to Sec. 6 para. 1(3) of the VAT Act (specific goods or passenger transport services) or
  • only revenues subject to reverse charge.

However, only deductible input tax incurred in Austria may be refunded. Input taxes in connection with cars are therefore not generally reimbursable in Austria.

Austrian entrepreneurs (example 1) are able to make an electronic application via FinanzOnline to have refunded input tax incurred in another EU Member State. In this case, a separate application has to be submitted for each Member State from which an input tax refund is sought. It is no longer necessary to submit a certificate of entrepreneurial status (form U70). Nor is it generally necessary to submit the bills. In certain cases, a copy must be provided at the request of the Member State providing the refund.

Minimum refund amount
The refund period must generally be at least three consecutive months and the amount to be refunded must be at least EUR 400. If the refund period is the entire calendar year or the last period of a calendar year, the amount to be refunded must amount to at least EUR 50.

TPA Tip:
After expiry of the deadline for submission on Sunday, 30 September – which cannot be extended – the legal claim for refunding shall lapse. On 1 October 2018, it will be too late! Therefore, be sure to complete your applications in full and on time. We are happy to assist you. Experience has shown that at the end of September there may be an overload on the system so that you might miss the deadline.

TPA Newsletter August 2018_EN
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