When creating VAT (value-added-tax) refund claims in accordance with rules and regulations of different countries, it can be challenging and complicated to keep track of the type of invoice that needs to be submitted with the claims. We want to shed light on this topic and help you to successfully reclaim your VAT.
When applying for VAT refunds it is necessary to attach the receipts for which you are reclaiming incurred VAT to your claim. There are some categories of invoices that need to be distinguished here.
As the name suggests, we are talking here about paper-based invoices. They are printed on sheets of paper and sent via regular mail, or they are directly issued to customers after a purchase or a service delivery.
With the digital age, electronic invoices (e-invoices for short) emerged. These are issued and transmitted in an electronic format. If you were to print out an e-invoice, you would create a copy, as the invoice in its electronic format is still the original.
Digitized paper invoices (scans)
Due to the fact that the majority of invoices are still paper-based, it makes sense to digitize them to optimize further processing, increase data security and make remote accessibility possible. We recommend using a designated scanning app or software to ensure that all relevant data points on an invoice are captured correctly. Nevertheless, it is recommended to keep the original paper invoices in case the tax authorities make a request to see them.
It depends on the claimants' established location (COE, country of establishment) and the country where VAT is being reclaimed (COR, country of refund) to determine for which cases what type of invoice (paper, e-invoice or scan) needs to be presented.
Invoices for domestic VAT refunds
For domestic VAT recovery, i.e. supporting the input VAT position on your periodical VAT returns, mostly all three invoice types are accepted. Regarding scans, however, the local standards for digitization and archiving have to be considered.
Invoices for EU VAT refunds
For EU-based companies reclaiming VAT in other EU member states, electronic invoices and scans are generally accepted and sufficient. The submission of paper invoices along with the claim is not necessary.
However, tax authorities may require the submission of original invoices if there is reasonable doubt. That is why it is always important to store original paper invoices, even though they were digitalized. Upon claim submission, Italy as the COR requests claimants to present all invoices in a digital format. Most EU Countries apply the thresholds set out in article 10 of EU Directive 2008/9/EC where digital invoices (scans or e-invoices) need to be submitted with the claim when the invoice amount is in excess of 1,000 EUR or 250 EUR for fuel. Bulgaria, Denmark, Croatia, Luxembourg, Netherlands, Austria, Portugal, Sweden, Slovenia do not require the submission of invoices with the claim.
Invoices for third country VAT refunds
When it comes to non-EU claimants reclaiming VAT in the EU, or EU-based claimants reclaiming VAT in non-EU countries, as a general rule, original paper invoices must be attached to the claim. However, there are some exceptions.
Since the type of invoice is relevant if a company is eligible for a VAT refund, we advise companies to enforce their processes in order to receive and process mostly e-invoices. This type of invoice is accepted in all three processes and therefore, is favourable in comparison to paper invoices or digital scans of paper invoices.
We have put together a free overview addressing what type of invoice needs to be submitted for VAT claims depending on the rules of the country of refund.