“One-stop” VAT refunds from European Union countries

EuropeLithuania
FinancesPublic servicesTax administration

Residents and businesses subject to value-added tax (VAT) on business activities in a Member State of the European Union where they are not established or registered are often entitled to a refund from the country where they paid VAT. Previously, Lithuanian taxpayers had a hard time with this, because they had to communicate with the institutions of each country separately.

The VAT refund procedure has been significantly simplified with the introduction of the EPRIS (Electronic Application Reception System) system, made by Novian Systems, which allows VAT to be recovered from European countries on a one-stop-shop basis.

Situation

Lithuanian taxpayers submit thousands of applications to the State Tax Inspectorate (STI) every year for a refund of VAT paid in other European Union (EU) the Member States. In this way, millions of euros are returned to the country’s residents and companies from abroad every year.

In Lithuania, the process of VAT recovery from EU countries was complex, lengthy, and required specific knowledge. Applications for VAT refunds had to be filled in by taxpayers on a country-by-country basis.

Problem

The VAT recovery system did not provide all the necessary services and the data was updated non-operatively. If large organizations approached the issue, there were large numbers of requests that were difficult to manage.

Besides, system users were unable to track the process of processing submitted documents or track the transmission history of related tasks. Finally, such a long and complicated VAT recovery process meant that less working capital would be available to businesses.

To simplify and speed up this procedure, it was decided to replace the old system with a more modern one – one, which would be more convenient and more efficient.

Solution

In response to the need for a more convenient, simpler, and easier system to be used by taxpayers, Novian Systems (then operated as “Algoritmų sistemos”)“ has developed and implemented an electronic application system (EPRIS).

It ensures the completeness of services, the efficiency of data updating and has functional interfaces with other STI systems. Implemented IT solutions ensure automated processing of electronic services related to tax administration.

Result

The new system ensures that citizens and businesses can submit VAT refund applications on a “one-stop-shop” also known as the “once-only” principle for all countries of the European Union. This means that it is enough to fill in one document and all EU Member States mentioned in it shall receive the request.

Updates to the system have improved the automated VAT registration function and ensured reliable protection of taxpayer data. The new system also increased the transparency of the VAT recovery procedure, and the operative exchange of information between the STI and taxpayers, public administration institutions, and other entities using the services provided by the Inspectorate was started.

The installation of EPRIS has improved the quality and availability of STI services related to fees and amount administration procedures. Besides, decision-making in public administration using information technology has been developed. As a result, the efficiency of STI activities has increased, funds, time and human resources have been saved.

For the new system to work qualitatively and efficiently, Novian Systems not only took care of the development, analysis, programming, and implementation of EPRIS but also ensured the support and maintenance of the system.