Successfully claiming back VAT from another EU Member State

22.10.2013

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Recreational yacht bought in the Kingdom of the Netherlands.

Introduction

Claiming back VAT from another EU Member State is a relatively frequent task, which APOGEO performs in the context of its international tax consultation work. Making a successful VAT claim very often demands plenty of knowledge and experience.

Since 2010, the Czech Republic has a system up and running for claiming back VAT from other EU Member States, which means it is no longer necessary to send a request to claim back VAT to the tax authority of the state in question. The Czech Ministry of Finance has set up a special app for this purpose on a portal operated by the Financial Administration.

But correctly filling out and sending off the request is only the beginning of the actual work involved.

Progress of the job

A Czech entrepreneur bought a recreational yacht in the Kingdom of the Netherlands for the purposes of chartering. Our assignment was therefore to refund the VAT paid on the boat to the Czech commercial entity.

The critical challenge was to demonstrate that the yacht was acquired and would be used for commercial activity - in this case to be chartered by third parties.

The Dutch tax authority was very thorough in its proceedings, and requested that the Czech entrepreneur corroborate a series of facts with a large quantity of documentation. The main facts requiring proof were not simply the entrepreneur’s existence, registered office, method of conducting business and their purchase of the boat, but in particular the method of mediating and corroborating the actual charter, the charterers, and the place where the charter took place and would occur.

For this reason complete documentation was drawn up with foreign language translation, including everything from the relevant extract from the Commercial Register, through those sections of the general ledger proving the integration of the boat into the business assets and right up to the actual charter contracts.

After the presentation of evidence, there followed very intensive communication and discussions with the Dutch tax authority, which in our expert opinion were complicated by the unusual demands from the Dutch side (compared to their Czech counterparts) and in a practical sense by a delay caused by correcting certain technical defects on the vessel. These technical defects were claimed against the Dutch manufacturer by the Czech owner in between acquiring the boat and its first chartered voyage.

Conclusion

The Czech entrepreneur was refunded VAT to the tune of 5 million CZK from their purchase in the Kingdom of the Netherlands of a recreational yacht. This is a significant sum for the vast majority of Czech entrepreneurs, but is often very difficult to attain thanks to administrative and bureaucratic obstacles.

The simplest solution for the Czech entrepreneur is to authorize the tax consultants APOGEO, who have practical experience negotiating with tax administrators from various EU countries. Granting power of attorney to negotiate with the tax authorities in the Czech Republic and abroad enables the client to be fully represented and minimizes their involvement in the bureaucracy of the entire process.

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