The road services expert > VAT Refunds Rules and procedure

The road services expert > Why was VAT introduced?

Sébastien Schmitt – Vialtis C.E.O. VAT Refunds – Rules and Procedure3/ 21 What is VAT?  VAT: definition Value Added Tax Indirect tax Paid by the final user of a product or a service  VAT: background First introduced in Europe by France in 1948 Gradually extended throughout Europe after 1967 VAT now applies in 136 countries worldwide VAT generates on average a 1/4 of national tax revenues

Sébastien Schmitt – Vialtis C.E.O. VAT Refunds – Rules and Procedure4/ 21 A neutral tax  VAT, a « neutral tax » But significant item when not budgeted for  Will of harmonisation within the developing European Community Directive 79/1072/EEC (1979): 8 th Directive  VAT is a neutral tax for companies that purchase goods or services in other EEC countries

The road services expert > What legislation applies to refunds?

Sébastien Schmitt – Vialtis C.E.O. VAT Refunds – Rules and Procedure6/ 21  Enables companies to: reclaim VAT paid on goods/services purchased in fellow EEC countries benefit from comparable conditions throughout EEC  Provided that: the companies are not engaged in taxable transactions in countries where VAT is paid  The system is now operational in the 25 Member States similar systems exist in Switzerland and Norway The 8 th Directive

Sébastien Schmitt – Vialtis C.E.O. VAT Refunds – Rules and Procedure7/ 21 Other Directives  13th Directive EEC: Road hauliers from outside the EU VAT recovery in certain EU countries Restrictions apply as individual Member States are not obliged to comply or can impose conditions (mutual agreements, limit refunds to certain goods and services)  Passenger transport companies: A directive has yet to be adopted Some countries allow them to recover VAT under 8 th Directive (list on appendix)

The road services expert > VAT refund statistics and practices in different EU countries

Sébastien Schmitt – Vialtis C.E.O. VAT Refunds – Rules and Procedure9/ 21  The standard - which is also the highest - VAT rate varies from: 15% to 25% (within the EU) VAT rate per country * Not part of the European Union

Sébastien Schmitt – Vialtis C.E.O. VAT Refunds – Rules and Procedure10/ 21 VAT expenditure  Impact on international road hauliers Key items of expenditure for VAT  Diesel  Tolls  Repairs  Truck washes  Drivers' meals and hotels Account for some 20% of hauliers’ total outlay  Major countries of claim Clear link between number of VAT claims and rate of excise duty and VAT on diesel, the size of the country and its geographical location Further factor is VAT on tolls or road taxes (with the exception of Toll-Collect in Germany)

Sébastien Schmitt – Vialtis C.E.O. VAT Refunds – Rules and Procedure11/ 21 Statistics  The highest number of VAT claims Western European countries  Austria  France  Belgium followed by:  Luxembourg  Spain  The Netherlands  Central Europe : 2 major countries of VAT claims  Czech Republic  Poland Most of the claims are submitted by Central European road hauliers

Sébastien Schmitt – Vialtis C.E.O. VAT Refunds – Rules and Procedure12/ 21 Notification times  Average times under optimal conditions, i.e. using all the channels made available by certain national tax authorities for introducing VAT claims and supposing that claims are submitted by professionals  Lack of accurate data for the new Member States CountryMonthsComment Luxemburg12-18 improvement Belgium3-5 Netherlands5 Denmark5 Austria6-12 Germany9 France3-5 United Kingdom7 Italy9 improvement Ireland6 Spain1-3 if filed online Sweden3 Finland6 Hungary7 Slovenia11 Slovakia? Czech Rep.6 Poland11

Sébastien Schmitt – Vialtis C.E.O. VAT Refunds – Rules and Procedure13/ 21 Problems encountered  Certain countries are still not respecting the six-month maximum notification period set out under the 8 th Directive Luxemburg (backlog of refund claims) Austria (procedure) Italy (significant progress)  This delay is seldom respected in Central Europe (Documents required, Methods used to process claims) Claims are not about to be processed on a par with other Member States (exception of Hungary)  A lot of Road hauliers coming from Eastern Europe are still not recovering VAT.

The road services expert > VAT refund claims procedure

Sébastien Schmitt – Vialtis C.E.O. VAT Refunds – Rules and Procedure15/ 21 Why to call on a professional?  We advise road hauliers to use a reputable professional for their European VAT refund claims because: They run a high risk of refunds being refused or only partially accepted, or late payments Costs of their own VAT claims higher than the professional’s fees Virtually inconceivable to successfully submit claims in more than 3 countries (language barriers)  Each country applies its own rules and regulations for submitting claims  The rules for VAT invoicing and deductability vary between countries

Sébastien Schmitt – Vialtis C.E.O. VAT Refunds – Rules and Procedure16/ 21 Professional VAT refund services  Vialtis benefits from an in-house procedure guide with all the information needed to introduce claims in 27 countries.  Majority of leading European road hauliers lack the capacity to deal directly with national bodies and efficiently handle VAT claims in Europe.  Different solutions exist, from a standard refund service to the advance refunds (Net-Invoicing)

Sébastien Schmitt – Vialtis C.E.O. VAT Refunds – Rules and Procedure17/ 21 Advance refunds  The benefits of advance refunds are obvious: Immediate VAT refunds in numerous countries Improvement of cash-flow (at little additional cost) without having recourse to banks  Hauliers no longer need to follow up their refund claims: VAT refunds are paid straight into their bank account (VIALTIS), Or credited to their fuel card account (DKV and ESSO)

The road services expert > Conclusion

Sébastien Schmitt – Vialtis C.E.O. VAT Refunds – Rules and Procedure19/ 21 VAT news  Road hauliers working in several EU countries only need to register where they perform cabotage operations.  Central European hauliers (except Slovenia) are not yet authorised to conduct cabotage operations in other Member States.  Refund of excise duty on diesel, or Carbon Tax: Road hauliers can claim back €25 to €33 per 1,000 litres from Customs authorities in France, Belgium and Italy This system based on « professional diesel users » could spread to other countries

Sébastien Schmitt – Vialtis C.E.O. VAT Refunds – Rules and Procedure20/ 21 Today’s assessment  Positive points: All 25 Member States can reclaim VAT expenditure in the EU (8 th Directive) Faster processing and improved procedures Regular discussions at European Commission  Negative points: Still no alternative to the 8 th Directive to enable companies to get their European VAT expenditure directly refunded in their country Several more years before a solution is found A lot road hauliers are not recovering their VAT= expenditure  New procedures between Member States are required and the situation is made more complex by unanimous approval of all tax-related decisions in the EU

The road services expert > Thank you for your attention Vialtis FRANCE (Headquarters) Tel: + 33 (0) Fax: + 33 (0) Vialtis Sro (SLOVAKIA) Tel: (0) Fax: (0)