> VAT Refunds Rules and procedure

1. > VAT RefundsRules and procedure The road services expert

2. > Why was VAT introduced? The road services expert

3. What is VAT? • VAT: definition • Value Added Tax • Indirect tax • Paid by the final user of a product or a service • VAT: background • First introduced in Europe by France in 1948 • Gradually extended throughout Europe after 1967 • VAT now applies in 136 countries worldwide • VAT generates on average a 1/4 of national tax revenues VAT Refunds – Rules and Procedure

4. A neutral tax • VAT, a « neutral tax » • But significant item when not budgeted for • Will of harmonisation within the developing European Community • Directive 79/1072/EEC (1979): 8thDirective • VAT is a neutral tax for companies that purchase goods or services in other EEC countries VAT Refunds – Rules and Procedure

5. The road services expert > What legislation applies to refunds?

6. The 8th Directive • Enables companies to: • reclaim VAT paid on goods/services purchased in fellow EEC countries • benefit from comparable conditions throughout EEC • Provided that: • the companies are not engaged in taxable transactions in countries where VAT is paid • The system is now operational in the 25 Member States • similar systems exist in Switzerland and Norway VAT Refunds – Rules and Procedure

7. Other Directives • 13th Directive EEC: • Road hauliers from outside the EU • VAT recovery in certain EU countries • Restrictions apply as individual Member States are not obliged to comply or can impose conditions (mutual agreements, limit refunds to certain goods and services) • Passenger transport companies: • A directive has yet to be adopted • Some countries allow them to recover VAT under 8thDirective (list on appendix) VAT Refunds – Rules and Procedure

8. > VAT refund statistics and practices in different EU countries The road services expert

9. VAT rate per country VAT reclaimable by Date VAT was Standard Countries passenger introduced rate transport companies Austria Jan. 1973 20% Belgium Jan. 1971 21% Cyprus July 1992 15% Czech Republic Jan. 1993 19% YES Denmark July 1967 25% YES Estonia Jan. 1992 18% Finland June 1994 22% YES France Jan. 1948 19.6% YES Germany Jan. 1968 16% Greece Jan. 1987 18% Hungary Jan. 1988 25% YES Ireland Nov. 1972 21% Italy Jan. 1973 20% YES Latvia Jan. 1992 18% Lithuania Jan. 1992 18% Luxemburg Jan. 1970 15% YES Malta Jan. 1995 18% Netherlands Jan. 1969 19% Poland July 1993 22% Portugal Jan. 1986 19% YES Slovak Republic Jan. 1993 19% YES Slovenia July 1999 20% Spain Jan. 1986 16% Sweden Jan. 1969 25% YES United Kingdom Apr. 1973 17.5% YES Norway* Jan. 1970 24% Switzerland* Jan. 1995 7.6% • The standard - which is also the highest - VAT rate varies from: • 15% to 25% (within the EU) * Not part of the European Union VAT Refunds – Rules and Procedure

10. VAT expenditure • Impact on international road hauliers • Key items of expenditure for VAT • Diesel • Tolls • Repairs • Truck washes • Drivers' meals and hotels • Account for some 20% of hauliers’ total outlay • Major countries of claim • Clear link between number of VAT claims and rate of excise duty and VAT on diesel, the size of the country and its geographical location • Further factor is VAT on tolls or road taxes (with the exception of Toll-Collect in Germany) VAT Refunds – Rules and Procedure

11. Statistics • The highest number of VAT claims • Western European countries • Austria • France • Belgium • followed by: • Luxembourg • Spain • The Netherlands • Central Europe: • 2 major countries of VAT claims • Czech Republic • Poland • Most of the claims are submitted by Central European road hauliers VAT Refunds – Rules and Procedure

12. Notification times Country Months Comment Luxemburg 12-18 improvement Belgium 3-5 Netherlands 5 • Average times under optimal conditions, i.e. using all the channels made available by certain national tax authorities for introducing VAT claims and supposing that claims are submitted by professionals Denmark 5 Austria 6-12 Germany 9 France 3-5 United Kingdom 7 Italy 9 improvement Ireland 6 Spain 1-3 if filed online Sweden 3 Finland 6 Hungary 7 Slovenia 11 Slovakia ? Czech Rep. 6 Poland 11 • Lack of accurate data for the new Member States VAT Refunds – Rules and Procedure

13. Problems encountered • Certain countries are still not respecting the six-month maximum notification period set out under the 8th Directive • Luxemburg (backlog of refund claims) • Austria (procedure) • Italy (significant progress) • This delay is seldom respected in Central Europe (Documents required, Methods used to process claims) • Claims are not about to be processed on a par with other Member States (exception of Hungary) • A lot of Road hauliers coming from Eastern Europe are still not recovering VAT. VAT Refunds – Rules and Procedure

14. > VAT refund claims procedure The road services expert

15. Why to call on a professional? • We advise road hauliers to use a reputable professional for their European VAT refund claims because: • They run a high risk of refunds being refused or only partially accepted, or late payments • Costs of their own VAT claims higher than the professional’s fees • Virtually inconceivable to successfully submit claims in more than 3 countries (language barriers) • Each country applies its own rules and regulations for submitting claims • The rules for VAT invoicing and deductability vary between countries VAT Refunds – Rules and Procedure

16. Professional VAT refund services • Vialtis benefits from an in-house procedure guide with all the information needed to introduce claims in 27 countries. • Majority of leading European road hauliers lack the capacity to deal directly with national bodies and efficiently handle VAT claims in Europe. • Different solutions exist, from a standard refund service to the advance refunds (Net-Invoicing) VAT Refunds – Rules and Procedure

17. Advance refunds • The benefits of advance refunds are obvious: • Immediate VAT refunds in numerous countries • Improvement of cash-flow (at little additional cost) without having recourse to banks • Hauliers no longer need to follow up their refund claims: • VAT refunds are paid straight into their bank account (VIALTIS), • Or credited to their fuel card account (DKV and ESSO) VAT Refunds – Rules and Procedure

18. > Conclusion The road services expert

19. VAT news • Road hauliers working in several EU countries only need to register where they perform cabotage operations. • Central European hauliers (except Slovenia) are not yet authorised to conduct cabotage operations in other Member States. • Refund of excise duty on diesel, or Carbon Tax: • Road hauliers can claim back €25 to €33 per 1,000 litres from Customs authorities in France, Belgium and Italy • This system based on « professional diesel users » could spread to other countries VAT Refunds – Rules and Procedure

20. Today’s assessment • Positive points: • All 25 Member States can reclaim VAT expenditure in the EU (8th Directive) • Faster processing and improved procedures • Regular discussions at European Commission • Negative points: • Still no alternative to the 8th Directive to enable companies to get their European VAT expenditure directly refunded in their country • Several more years before a solution is found • A lot road hauliers are not recovering their VAT= expenditure • New procedures between Member States are required and the situation is made more complex by unanimous approval of all tax-related decisions in the EU VAT Refunds – Rules and Procedure

21. > Thank you for your attention The road services expert Vialtis FRANCE (Headquarters) Tel: + 33 (0)1 41 98 48 67 Fax: + 33 (0)1 41 98 48 01 E-mail: france@vialtis.com Vialtis Sro (SLOVAKIA) Tel: + 421 (0)2 50109911 Fax: + 421 (0)2 55565434 E-mail: slovakia@vialtis.com