Balance at payer’s VAT e-Account: How to Refund

There is a balance in the Treasury’s electronic account of the value added tax payer (hereinafter – VAT). How to refund it to the current bank account?

VAT payment principle

It should be reminded briefly the VAT payment principle: the payer transfers the VAT amount declared by him/her in the declaration not immediately to the budget, but to his/her electronic account in the Treasury. And the Treasury transfers this amount to the budget according to the register received from the State Fiscal Service, but not more than the amount specified in it. It may be less if there is not enough money in the electronic account. Then the payer should top up the electronic account to pay off their debt to the budget.

As we can see, this VAT payment procedure makes it impossible for an overpayment of this tax to appear in the integrated payer card. In addition, funds may be deposited in the electronic account, in particular, and transferred by the payer from the current account in the bank to replenish the registration limit in order to register tax invoices in the Unified Register of tax invoices (hereinafter – URTI). They remain in the electronic account and at the same time participate in the calculation of the registration limit.

Before recording these funds before the refund, it should be convinced that they are not needed in the electronic account soon. After all, according to the submitted application (at the moment of its submission), the indicator ∑_ПопРах in the formula of calculation of the registration limit (Σ_Накл) will automatically decrease, and therefore the registration limit itself decreases.

Obstacles to VAT refunds

There are still a number of obstacles to return funds from the electronic account to the bank’s current account of the payer at the bank, which are set up by 200¹.5, 200¹.6 of the Tax Code of Ukraine, para. 21 of the Procedure of electronic administration of value added tax, approved by the Resolution of the Cabinet of Ministers of Ukraine of 16.10.2014, No. 569.

1. Refund to the current account of the payer in the bank should be made provided that on the date of submission of the VAT return the amount of funds in the electronic account exceeds the amount of:

• VAT tax debt;
• tax liabilities declared in line 18 of the VAT return.

That is, even if there is no VAT tax debt, it is not only the balance of the funds in the electronic account that is payable to the payer, but only the difference between the amount of funds in that account and the declared tax liabilities for the current reporting period.

2. Refund should be made in the absence of excess of the VAT amount in the taxpayer’s compiled in the reporting period and tax invoices registered in URTI over the amount of VAT tax liabilities in line 9 of the return of the same reporting period.

3. Refund should be made within the amount of the registration limit at the date of submission of the declaration.

4. The last but not least condition is the submission of the application. As all the preconditions are tied to the VAT return filed during the reporting period, the application is also submitted with the declaration. In addition, in accordance with the prescribed form in accordance with Annex 4, “Applications for the refund of the amount of budgetary compensation and/or the amount of funds in the electronic administration system of value added tax and/or the registration amount of the reorganized taxpayer in the calculation of the registration amount of the successor (Д4)” to the declaration.

Annex 4 is completed only in Tables 2, 3 and 4 (if applicable).

In Table 2 of Annex 4, the amount of funds in an electronic account that can be converted into a current account is defined as the difference of the column:

• 1 – the amount of funds in the electronic invoice at the time of submission of the VAT declaration;
• 2 – the amount of VAT tax payable in line 18 of the declaration of the current reporting period;
• 3 – the amount of VAT tax debt at the time of filing the declaration.

If column 1 < (co. 2 + co. 3), the funds from the electronic account will not be refunded.

Table 3 of Annex 4 should indicate the appropriate amount in words and figures, as well as details of the current account with the bank to which the payer wishes to receive these funds.

Table 4 of Annex 4 should be filled in if column 3 in Table 2 of the same Annex is filled in, i.e. in the case of VAT tax debt at the date of filing of the declaration. It should be indicated in words and numbers the amount of tax debt from column 3 of table 2.

In this case, the amount of funds in the electronic account (or a part of it) minus the amount of VAT to be transferred to the budget (line 18 of the declaration) will be transferred to the budget to repay the VAT tax debt.