Update on VAT refund procedures and the temporary measure for demolition and reconstruction

Recent developments in the field of VAT include the revised VAT refund procedures applicable as from 1 July 2022 and a circular concerning the extension of the 6% VAT rate in relation to demolition and reconstruction.

To modernise the current VAT refund procedures for VAT taxable persons established outside the EU and to align them with those for taxable persons established in another EU Member State, Royal Decree no. 56 of 17 December 2009 is replaced. The new Royal Decree no. 56 of 10 April 2022 covers the VAT refund to taxable persons established in another Member State as well as the refund to non-EU established taxable persons. Accordingly, the rules for refunds to VAT taxable persons established in a Member State other than the Member State of refund, remain generally unchanged compared to the rules of the old Royal Decree no. 56. (see Chapter 2 of the new Royal Decree). However, in the context of aligning the refund procedures, the Royal Decree is supplemented with new rules for VAT taxable persons established outside the EU (see Chapter 3 of the new Royal Decree). These new rules are important for efficiency gains in the Tax Authorities’ administrative processes, especially in light of the expected increase in refund requests due to Brexit (see also our previous news items of 7 January 2022 and 3 November 2021).