For businesses that operate internationally, claiming VAT refunds can be a complicated and time-consuming process, especially when it comes to returned goods. Fortunately, the introduction of the Import One-Stop Shop (IOSS) in the European Union (EU) has made the process much simpler. In this blog post, we will take a closer look at how IOSS allows businesses to claim VAT refunds on returned goods.

Credit Note

If goods are returned and VAT has been charged and paid for to the EU tax authorities under the Import One-Stop Shop (IOSS), the seller may be able to issue a credit note to the buyer for the VAT amount paid, so that the buyer can start the refund process.

The credit note should include information such as the original invoice number, the date of the original transaction, the reason for the return, and the amount of VAT being refunded. The buyer can then use the credit note to claim a refund of the VAT from their national tax authorities.

It’s important to note that the process for issuing credit notes and claiming refunds may vary depending on the specific circumstances and the country where the VAT was paid.

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READ MORE: IOSS – Overpayments of VAT
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VAT Refund Claiming Procedures

If you need to claim a VAT refund of returned goods under the Import One-Stop Shop (IOSS) system, the following procedures and requirements generally apply:

1. Notify the seller: The first step is to notify the seller that you are returning the goods and requesting a VAT refund. You should provide them with any necessary documentation, such as a copy of the original invoice and proof of the return.
   
2. Obtain a credit note: The seller should issue a credit note that includes the relevant information, such as the amount of VAT paid, the date of the original sale, and the reason for the return.
   
3. Submit a VAT refund claim: You will need to submit a VAT refund claim to the tax authority in the EU country where the VAT was paid. This can usually be done online, and you will need to provide the credit note from the seller as well as any other relevant documentation, such as proof of the return.
   
4. Meet the deadlines: There are usually strict deadlines for submitting a VAT refund claim, and these will vary depending on the EU country where the VAT was paid. You should check with the relevant tax authority to find out the deadline for submitting your claim.

It’s also worth noting that the IOSS system is still relatively new, and the procedures and requirements for claiming a VAT refund on returned goods may vary by jurisdiction. It’s important to stay up-to-date with the latest guidance from the relevant tax authority to ensure compliance with local regulations.

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