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VAT Recovery for Multinationals
Multinational corporations must first determine the appropriate VAT registration structure to comply with local regulations and to meet the needs of the business. Once the structure has been set, companies must establish processes to recover these funds.
For European business activity, two directives govern VAT recoverability:
- EEC 8th VAT Directive governs filings for companies that are VAT-registered in the EU, entitling them to recover VAT incurred in other EU Member States.
- EEC 13th VAT Directive governs filings (based on governmental reciprocity agreements) for companies that are not VAT-registered in an EU Member State.
Recovery in countries outside the EU will depend on specific reciprocity agreements between the countries in question. For example, recovery opportunities exist for US corporations incurring VAT in Canada, Norway, South Korea and Switzerland, among others.
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