The deadline for submitting refund applications for VAT paid abroad is approching

It often happens that a company uses a service or purchases a product in a member state where it is not otherwise engaged in any taxable economic activity. It is good to know that in such cases, tax subjects have the right to get the VAT paid abroad refunded, provided that the goods or services purchased abroad serve the purpose of their business activity they are pursuing in their country of establishment and entitling them to VAT deduction. In addition to EU member states, it is also possible to get VAT refunded in connection with transactions in third countries, on the basis of the principle of reciprocity (such third countries include Switzerland, Liechtenstein, Norway, the Republic of Serbia and Turkey).

The process of foreign VAT refunds for countries established in the member states of the European Union is in a one-stop system, which means that the application is to be submitted to the tax authority according to the company’s own country of establishment. Hungarian tax subjects may submit their applications, separately for each country, to the National Tax and Customs Administration (NAV) electronically, via the ELEKAFA form specifically designated for this purpose. Applications submitted in a paper form are automatically rejected by the tax authority, without examining the merits of the case. In case of the third countries mentioned above, the one-stop system does not work; in their case, the applications are to be submitted directly to the tax authority of the given state.

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