VAT Refunds - Best Practices for the Right Details & Documentation

There is a love-hate relationship to VAT, most of which may be based on a number of unknown and some fear mongering that has been going on in relation to the subject.  Needless to say, it's hard to chase away the seed of fear which has been planted in our minds along the years but we can surely bridge the knowledge gap, and lessen the unknown surrounding the topic. 

One key matter is documentation - most importantly the invoice itself.  Time and time again, during our work, we find a number of invoices that are non-compliant. This may be of little importance to the end user, however, when collecting invoices to reclaim VAT and simply submit a VAT Return, a non-compliant invoice should be eliminated. This could lead to an increase in expenses, as the refunds which the company would have been entitled to would be lost due to a simple error. 

That's precisely why we thought of listing out the requirements to issuing a legally-compliant invoice:

The Customer

From a customer perspective, which might be yourself or your company's customer, you must collect the following:

• Company Name
• Company Address
• Company VAT Number

The company VAT number is crucial, as a client who does not have a VAT number (the number that enables the company to trade internationally within the EU) would be deemed as an individual and the reverse charge mechanism would not be triggered if the transaction in question is an intra-community transaction.  It's to be noted that if the Reverse Charge mechanism is triggered, this is duly notified within the transaction. 

The Vendor

Vendor details are very similar to those of a customer.

• Vendor Name
• Vendor Address
• Vendor VAT Number

The Individual

A number of companies would want to insert the individual with whom they are transacting.  This is especially important when it is a sale on credit and the company has to chase the individual for payment. In this case, the individual details may be inserted but not at the expense of the customer details, so it is usually limited to a simple name and surname preceding the company details.

The Invoice Details

Invoice details are crucial but, in most cases, based on our experience the details are rarely complete.  The following information is always required:

• Transaction Number
• Transaction Date
• Transaction Currency
• Service Details
• VAT Amount Charged, Segmented Per VAT Rate
• Total Invoice Amount

Exceptions

These regulations are applicable to the Maltese scenario and some peculiar variants may apply.  For any queries in relation to foreign VAT recovery and the invoice details, please do not hesitate to get in contact with us via our social media or through email via valletta@vat4u.com.