Bulletin, November 2017

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Tax advice in the field of national and international tax law

KWR Belokonski Gospodinov and Partners is an internationally operating lawfirm, located in Sofia, Bulgaria, which offers in close cooperation with the leading Austrian law firm KWR Karasek Wietrzyk Rechtsanwälte and international networks of law offices worldwide professional legal support in all areas of business law.

We offer comprehensive legal services, with particular emphasis on national and international tax law. Some of our lawyers have extensive experience in the tax and financial public administration. Our profound experience and knowledge in the field of tax law and the tax litigation allows us to:

  • RENDER ADVICE ON REFUND OF VALUE ADDED TAX TO TAXABLE PERSONS NOT ESTABLISHED IN THE MEMBER STATE OF REFUND BUT ESTABLISHED IN ANOTHER MEMBER STATE (COUNCIL DIRECTIVE 2008/9/EC OF 12 FEBRUARY 2008)
  • RENDER ADVICE ON AVOIDING DOUBLE TAXATION
  • SUCCESSFULLY REPRESENT OUR CLIENTS BEFORE THE TAX AUTHORITIES AND IN ADMINISTRATIVE AND TAX LITIGATION BEFORE ALL ADMINISTRATIVE COURTS

It is essential for the companies, operating on the Community’s international market, the opportunity to refund the VAT on purchased goods, received services or importation in Member State where they are not established. Council Directive 2008/9/EC of February 12 2008 laying down detailed rules for the refund of value added tax, provided in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State allows the exercise of this right.

Despite of the extensive practice in this area, however, there are still a number of problems that impair companies to exercise their rights, conferred on them by the Directive.

The most common difficulties occur due to the poorly synchronized electronic exchange of data between the Member State of refund and the Member State of establishment of the company.

In the course of refund of VAT it is often the case that the refunding authority and the company fail to establish contact, which makes it impossible for the authorities to identify the factual setting for the formation of the tax credit and in the most cases the request for VAT refund are being rejected due to failure to present documents and written explanations or due to other communication reasons.

Another problem, faced by the companies, claiming VAT refunds, is the reference of Directive 2008/9/EC to the local legislation of the Member State of refund on the procedure for appeal against judgments or failure to adjudicate in time.

Each Member State introduces its own internal rules by local regulations, which not only implement the provisions and requirements of the Directive, but also, in view of the freedom, rendered to it by the Directive, develop the procedure with the regard to essential matters – such as appeal against the judgments or failure to adjudicate in time.

According to Art. 23 (2), of Directive 2008/9/EC appeals against decisions to refuse a refund application may be made by the applicant to the competent authorities of the Member State of refund in the forms and within the time limits laid down for appeals in the case of refund applications by persons who are established in that Member State. If, under the law of the Member State of refund, failure to take a decision on a refund application within the time limits specified in this Directive is not regarded either as approval or as refusal, any administrative or judicial procedures which are available in that situation to taxable persons established in that Member State shall be equally available to the applicant. If no such procedures are available, failure to take a decision on a refund application within these time limits shall mean that the application is deemed to be rejected.

This provision practically forces the applicant to be acquainted with the law of the Member State of refund and to comply with the rules, provided by the legislation in the Member State concerned, in order to be able to exercise its rights under this Directive. Hence, the companies claiming their rights to refund the VAT paid by them would face the need for competent advice and representation before Tax authorities of the Member State of refund.

Our experienced consultants support the companies throughout the whole refund process – from the filing of the application, which has to be consistent not only with the Directive, but also with the local legislation – to the subsequent communication with the Bulgarian Tax authorities, including the provision of additional documents and written explanations, if required, until the final VAT refund, observing all the deadlines and steps in the procedure.

KWR Belokonski Gospodinov and Partners offers further representation before the Bulgarian courts and competent authorities, in case of refusal or failure to respond within the prescribed period.