The input VAT borned by an EU company in other a Member state different from its country of establishment, may be recovered depending on the nature of the expense. There may be certain limits depending on the Member state. Likewise, for the recovery of input VAT in a third country, there must be VAT reciprocity between the countries.
In this regard, for the recovery of VAT in Spain related to certain goods and services, e.g. molds or access services linked to fairs, since 1 January 2015 reciprocity with the country of establishment of the company that is requesting the VAT refund is not required.
Regarding the problems that may arise from VAT perspective in international operations carried out in the different Member states, it is important to analyze the operations to be carried out in each country in accordance not only with European VAT Directive but also with local VAT regulations to identify and avoid any possible tax risks.
In relation with this, and after carrying out the corresponding VAT analysis, it may be concluded if the operation to be carried out will require a VAT registration or if it will not be necessary. Likewise, by analyzing the operations before they are carried out, it will be possible to avoid for example the reception of invoices with undue VAT, which cause headaches for companies in terms of their subsequent VAT recovery, given that their suppliers often put many complications for rectifying them, regardless of whether they have issued them incorrectly.
Based on the above, and in order to guarantee that the VAT paid in other Member states is neutral and does not represent a cost for the company, it is important to have a well-defined the procedure for the VAT refund, since the deadline for exercising the right to deduct differs depending on the procedure.
For VAT purposes, and concerning the VAT refund procedure to be followed, a distinction must be made between transactions carried out with EU countries and those carried out with third countries. The input VAT borned in Member State is recovered by filing 360 forms in the country of establishment of the company and this tax is in general terms fully recoverable, although depending on the country, there are certain limits depending on the type of expense, as we previously pointed out.
On the other hand, and for the recovery of the input VAT borned in third countries, there must be VAT reciprocity of treatment, and it is done by filing form 361 in the country where the VAT has been borne, and in general terms fiscal representation by a resident company is needed for the fulfillment of the tax form. As preciously said, in Spain and in relation to the VAT reciprocity there are certain exceptions depending on the acquired services or goods.
Euro-Funding collaborates with companies by advising them on their international operations and recovering foreign VAT. We anticipate the problems that may arise in international operations.
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