All companies that are subject to VAT have the option of requesting a refund of their VAT credit when the amount of tax collected and payable is less than the amount of tax to be recovered (deductible VAT and possible credit carryover).
Some businesses are more likely to be on VAT credit:
Those that buy and then export buy at the normal rate and then invoice their customers at the reduced rate, or those that have made large purchases and are struggling to sell.
We explain in detail in this article how the refund of the VAT credit works
VAT credit refund
Calculate the amount of the VAT credit
The calculation of the VAT credit is not complicated, it is the same principle as the calculation of the VAT payable except that the result will be negative. The State therefore has a tax debt towards the company; this is the VAT credit equal to:
Collected VAT payable –Deductible VAT on purchases and recoverable investments – VAT credit to be carried over
Note: A business that benefits from VAT exemption cannot request a VAT credit refund to recover the tax it pays on its purchases.
Use of VAT credit
The company which is in VAT credit has two solutions:
- Charge the credit to the next VAT return,or request reimbursement of the VAT credit.
- In all cases, the business must indicate on its VAT return how it intends to use the credit. After having calculated its amount, it will be appropriate:
- Eitherenters the amount in the box “charge on the next VAT return”,
- Eitherenters the amount in the “VAT credit refund request” box,
- Either to charge part of the VAT credit on the next declaration and to request reimbursement from the other part.
- The box containing these elements is located at the end of the declaration.
Refund of VAT credit
The rules for refunding the VAT credit differ depending on the company’s VAT tax regime. The use of the tax return calculator is important there.
Companies with the real simplified VAT regime
Companies that are placed under the real simplified VAT regime (that is to say that establish an annual VAT return and pay 2 half-yearly installments) can request the reimbursement of their VAT credit annually when it exceeds 150 euros.
A special form n ° 3519 must be completed and attached to the annual VAT return.
It is also possible to request a refund at the time of payment of one of the 2 half-yearly VAT installments but:
The reimbursement request must exceed 760 euros, and the VAT that can be reimbursed can only be that which applies to acquisitions of goods constituting fixed assets (invoices must accompany the request to prove this).
Companies with the real normal VAT regime
Companies that are placed under the real normal VAT regime (that is to say that draw up a monthly or quarterly VAT return) can request the immediate reimbursement of their VAT credit when it exceeds 760 euros.