Imagine that you are at Budapest Airport, waiting at the customs check and about to leave Hungary. As a non-EU resident, you are entitled to value added tax refund after your purchases made in the European Union. However, the conditions are quite complex. The regulation (see the European Commission’s website for more information) focuses on two main aspects: the person who made the purchase and the product that was bought. In this blog post, Helpers Finance tells you the most important details.
Do you qualify?
Firstly, we look at who can reclaim VAT after EU purchases. To qualify, the customer needs to be:
- a non-EU citizen who is not entitled to residency in any of the member states
- an EU citizen whose residence is located outside of the European Union
- a resident of a so-called third territory (e.g. Canary Islands, Faroe Islands)
The residents of European countries not in the EU (Iceland, Liechtenstein, Norway, Switzerland) are obviously included in the first category.
Does your purchase qualify?
The goods may only be bought for personal use and cannot be used before leaving the EU. They must also reach a certain value for VAT refund eligibility. In Hungary’s case, the minimum is EUR 175 per invoice. There is no maximum, but the goods need to be transported out of the European Union by the customer, so reclaimable value added tax is limited by the capacity of your luggage or vehicle. Moreover, the goods need to leave the EU within 90 days of the purchase, meaning that VAT is not refunded for anything bought over 90 days ago.
How to get your VAT refund at the customs check?
You have to think ahead when making your purchase: you must verify your non-EU status and ask for a tax refund form right then. The form and the invoice must be kept, since both will be needed for reclaiming value added tax when leaving the European Union. The documents need to be handed to the customs officer at the border (or at the airport if you are leaving the EU by plane). The refund can happen by various means and in some cases, VAT may even be deducted at the time of the purchase. It is possible to have the value added tax of multiple invoices refunded at the same time. However, reclaiming after crossing the border is not allowed.
Would you like to know more about VAT refund in Hungary? Contact us!
If you would like to know more, contact your English-speaking accountant at Helpers Finance for a detailed breakdown. You can learn more about our accounting services here. You can ask for a consultation by calling our office on +36 1 215 0712, by e-mailing firstname.lastname@example.org or by filling in our contact form.