Recovery of VAT from other EU countries for 2016

28 July 2017

Louise Eide Hartung, Director, VAT |

The deadline for applying for refund of VAT paid in other EU countries is approaching. Application for refund is done electronically via “TastSelv Erhverv”.

The possibility to reclaim VAT from other EU countries applies to Danish businesses, having incurred VAT-related expenses in other EU countries in 2016, without being obligated to register for VAT in the EU country, where the VAT was paid. Consequently, the VAT has not been reimbursed this way.

The expenses

The expenses for which VAT can be reclaimed are primarily travel and accommodation expenses incurred in the country concerned.

For example, there may be costs for renting a car, for fuel, or for the company's own car if this has been used for transportation to the country concerned, as well as road toll. There may also be travel expenses such as expenses for taxis, trains, buses or ferries, if VAT has been charged. However, passenger transportation is exempt from VAT in many countries.

VAT for hotel and restaurant bills can also be claimed. The same applies to expenses for representation, fairs and exhibitions and expenses for stands on such.

It is the rules in the country where the expenses are defrayed, which determines the types of expenses for which VAT can be reclaimed. Hence, there may be costs not qualifying for VAT deduction in Denmark, which can be reimbursed abroad and vice versa.

Application for refund

Application for refund of VAT is submitted electronically via “TastSelv Erhverv”. For expenses incurred in the calendar year 2016, the application for refund must be submitted no later than 30 September 2017.

If application is made for an entire calendar year, the amount of VAT must be at least DKK 400 per country. Businesses that, on a 3-month basis, work up a VAT claim of at least DKK 3,000, can apply for reimbursement 4 times a year.

As a main rule, the country to refund the VAT has 4 months to process the application and refund the VAT. If the stipulated deadlines are exceeded, interest apply.

No tax deduction

In its legal guidelines, the Danish tax authorities state that no tax deduction can be made for foreign VAT, which could have been refunded but has in fact not been. This view does not seem indisputable or supported by rulings from the National Tax Tribunal.

The above article is taken from tax:watch, our electronic English newsletter on Danish Tax and VAT matters. tax:watch is issued on the last Friday of each month and is free of charge. Please sign up here.