Question mark over VAT refunds for tourists from April

Question mark over VAT refunds for tourists from April

BUDAPEST - Foreign visitors may not be able to receive VAT refunds on goods purchased in Hungary from the start of April. Only two companies handle VAT refunds and the biggest of these, Global Refund, ceased to offer refunds on March 18 because of a dispute with the tax office APEH, Tuesday's Magyar Hirlap reported.

Although regulations on VAT refunds for foreign visitors will only change from April, tourists are already unable to reclaim VAT at many border crossing points. VAT refunds to foreign visitors total HUF 15-20bn a year. Although 350 companies are currently licensed by APEH to handle refunds, only two of them will be allowed to offer this service after April 1 as companies handling VAT refunds will require a licence from the financial regulator PSzAF.

From April 1, it seems likely that only one company will manage VAT refunds at the borders, and it does not have an office at all crossing points. It is not certain whether Global Refund, which has an office at every border crossing, will be in business in April as all of its offices, expect the one at Ferihegy Airport, have been closed since March 18.

Global Refund's chief executive Ferenc Delea told Magyar Hirlap that APEH is refusing to pay out VAT refunds to the company due to an ongoing legal dispute. APEH has questioned the validity of receipts from around 50 traders for goods worth HUF 2bn. APEH has withheld the refunds, imposed the highest possible fine (50pc of the amount claimed in refunds), and has threatened to send in the bailiffs. A court has prevented this last move, but APEH still refuses to refund VAT on the dubious invoices.

Mr Delea welcomed the change in the law as it will mean that the company will deal directly with the retailers that issued the receipts. Global Refund will only handle VAT refunds on receipts provided by retailers with which has a contract, and will demand bank guarantees from companies that are not old, trusted partners. The other company to remain on the market will also follow this policy, Magyar Hirlap reported. Global Refund currently has ties with 4,000 retailers. Mr Delea said that several companies currently operating with an APEH licence have asked to work as Global Refund clients. This would involve splitting the commission, which is currently 10-15pc, he added.

In the News