Reimbursement of VAT
Under the provisions of Regulation no 288/1995, issued by the Ministry of Finance and Economic Affairs, foreign enterprises, which are neither residents of Iceland nor have a permanent establishment here, may obtain reimbursement of Value Added Tax paid on goods and taxable services which have been purchased or imported for the commercial purposes of such enterprises in Iceland after March 1, 1995.
Such reimbursement can be effected to foreign enterprises which would be subject to registration for VAT in Iceland according to Article 5 and Article 6 of the Value Added Tax Act no. 50/1988 if the enterprises in question carried on such business in Iceland. This means i.a. that such enterprises as insurance companies, banks and other financial institutions can not obtain such reimbursement.
Another prerequisite shall be that the enterprise shall neither have sold goods nor taxable services in Iceland during the period to which the application refers.
Any reimbursement of Value Added Tax to foreign enterprises shall be only to the same extent as Icelandic enterprises can include the Value Added Tax on purchases of a corresponding nature in the tax on purchases under Article 15 and Article 16 of the Value Added Tax Act.
No reimbursement shall thus be granted in respect of Value Added Tax on purchases relating to meals for the owners and employees of the enterprises or relating to entertainment expenses and presents.
Form
To apply for reimbursement, form RSK 10.29 (Application for VAT Reimbursement to Foreign Enterprises), shall be used.
The application shall be addressed to:
Ríkisskattstjóri
Laugavegur 166
IS - 150 Reykjavík
The form is to be filled in Icelandic or English, using block letters or typing.
Period
The application shall refer to purchases of goods and taxable services over a period of at least two months, i.e. January - February, March - April, May - June, July - August, September - October, November - December, and not exceeding one calendar year. The period may be less than two months where it is a question of the remaining part of a calendar year. The applications shall be submitted at least 15 days after the period in question and not later than 6 years after the end of the calendar year to which the application refers.
Minimum Amounts
The application shall concern Value Added Tax amounting to not less than ISK 65.500. Where the application covers a calendar year or the remainder of a calendar year the amount shall be at least ISK 12.700.
Declarations
On the application form the applicant shall make a declaration in regard to the purposes of the purchases. The applicant shall also declare that the enterprise has during the reimbursement period in question neither delivered goods nor rendered taxable services in Iceland in respect of which the enterprise would be liable to registration and taxation.
Documentation
The original invoices or receipts of payment from the customs authorities noting the amounts of Value Added Tax paid by the enterprise shall be enclosed with the application, as well as other documentation which could be relevant with regards to the reimbursement amount.
The documents shall be returned to the applicant after his application has been processed.
Furthermore, the invoices shall be dated and they shall contain information on the names of the seller and the purchaser as well as information on the type, quantity and price of goods or services. Invoices amounting to ISK 6.000 or less which are issued by retailers or other enterprises which primarily sell to ultimate consumers may be submitted as documents even though they may not contain the name and address of the purchaser.
Certificate
Enclosed with the application shall be a certificate by the competent authority in the state where the enterprise is resident stating which type of business the applicant carries on there.
Such a certificate shall be valid for a period of two years from the date of issue. The period may be extended by two years at a time if the applicant continues to comply with the prerequisites of the Regulation.
Payment
Applications which have been received before the deadline and which are supported by all the required documents will be processed no later than one month and five days after the end of the repayment period. Applications which are received after the deadline will be processed with application pertaining to the next repayment period.
The applicant may request that the reimbursement be effected in his country of residence or in Iceland. Should the applicant request that the reimbursement be effected in his country of residence he shall bear all the cost arising thereof.
Miscellaneous
The applicant may apply for reimbursement during his stay or complete an application later and send it by mail or give an agent authorization to apply for and collect on his behalf the reimbursement of Value Added Tax. Form RSK 10.36 (Authorization for VAT Reimbursement to Foreign Enterprises) must be used for this authorization.
The submission of any incorrect or misleading information or nondisclosure of information required in connection with an application for reimbursement of Value Added Tax or in declarations made is punishable by law.
