European VAT refund

The 13th Directive and the EU VAT Refund Directive (Directive 2008/9/EC) are both mechanisms that allow businesses to claim Value Added Tax (VAT) refunds in European Union (EU) member states. However, there are some key differences between these two directives. Here are the main distinctions:

Scope and Applicability:

1. 13th Directive: The 13th Directive specifically applies to businesses located outside the EU that do not have a VAT registration within the EU. It is designed for non-EU businesses to claim VAT refunds on eligible expenses incurred in EU member states.

2. EU VAT Refund Directive: The EU VAT Refund Directive applies to businesses established within the EU, allowing them to claim VAT refunds on expenses incurred in other EU member states. It is applicable to VAT-registered businesses within the EU seeking cross-border VAT refunds.

Application Process:

1. 13th Directive: Under the 13th Directive, non-EU businesses need to submit a VAT refund application to the tax authorities of the EU member state where the VAT was paid. The application is typically made using a specific form provided by the tax authority.

2. EU VAT Refund Directive: The EU VAT Refund Directive introduces a simplified and streamlined process for VAT refund claims within the EU. Businesses can apply for refunds electronically through their home country's tax authority, rather than submitting applications directly to each member state.

Under the 13th Directive, non-EU businesses can claim VAT refunds on directly related business expenses incurred in European Union (EU) member states. While the specific eligibility criteria may vary between countries, here are some examples of expenses that are commonly considered directly related to business activities:

1. Accommodation Expenses: VAT paid on hotel stays or rental accommodations for business purposes, such as attending conferences, trade shows, or client meetings, can typically be claimed under the 13th Directive.

2. Meal Expenses: VAT paid on meals or restaurant bills incurred during business-related activities, such as client meals, team meetings, or business travel, may be eligible for a VAT refund.

3. Transportation Costs: VAT paid on transportation expenses directly related to business activities, such as airfare, train tickets, taxi fares, or car rentals, can often be claimed under the 13th Directive.

4. Trade Show or Exhibition Expenses: VAT paid on expenses related to participating in trade shows, exhibitions, or conferences, including booth rentals, registration fees, promotional materials, and related services, may be eligible for VAT recovery.

5. Professional Services: VAT paid on professional services directly related to your business activities, such as legal fees, consulting fees, or marketing services, may be eligible for a VAT refund.

6. Business Entertainment: VAT paid on entertainment expenses incurred for bona fide business purposes, such as client entertainment events, team-building activities, or business-related social functions, might be eligible for VAT recovery.

The documentation requirements for claiming VAT refunds can vary between countries and depend on the specific rules and regulations of the tax authority where you are submitting your VAT refund application. However, here are some common types of documentation that are often required:

1. Valid VAT Invoices: You will typically need to provide original VAT invoices or receipts for the expenses on which you paid VAT. The invoices should include the necessary details, such as the supplier's name and address, your business's name and address, the invoice date, a unique invoice number, a description of the goods or services, the VAT rate applied, and the amount of VAT paid.

2. Proof of Payment: You may be required to provide evidence of payment for the expenses on which VAT was paid. This can include bank statements, credit card statements, or other forms of payment documentation that demonstrate the payment was made.

3. Import/Export Documentation: If you are claiming VAT refunds on import or export transactions, you may need to provide additional documentation such as customs declarations, shipping documents, import/export licenses, or proof of export.

4. Proof of Business Purpose: Some tax authorities may require you to provide evidence that the expenses for which you are claiming VAT refunds were incurred for business purposes. This can include supporting documents like travel itineraries, conference agendas, or contracts that demonstrate the business nature of the expenses.

5. VAT Refund Application Form: You will likely need to complete a VAT refund application form provided by the tax authority. The form will require you to provide information about your business, VAT registration details, the reporting period for which you are claiming the refund, and details of the eligible expenses.

Please note that the specific documentation requirements can vary significantly between countries. Some countries may have more stringent requirements, while others may have simplified procedures for VAT refund applications.