Many businesses face the recurring dilemma of what to do with their VAT receivable at the end of the fiscal year: Should we request a refund, or carry it forward to offset future VAT liabilities? While this may seem like a straightforward decision, it involves strategic and operational considerations worth analyzing.

Let’s look at a practical example. According to the calculations, the VAT receivable for 2024 amounts to €100.000. The law provides two clear options: request the refund or carry it forward to 2025. Each path has its pros and cons, depending largely on the company’s operational context and the potential tax implications.

Requesting the Refund:

The Tax Office has until July 30, 2025, to process the refund. However, for significant amounts like this, it is almost certain that a tax audit will be initiated. If this happens, the timeline extends, and realistic expectations might look like this:

• Audit initiation: June 2025 (estimated).
• Audit conclusion: December 2025.
• Refund processed: between January and February 2026.

While requesting a refund ensures the cash is recovered, it often comes with the cost of navigating a tax audit, which consumes time, resources, and entails some risk.

Carrying It Forward to 2025:

An alternative is to carry forward the balance to 2025 and offset it against output VAT from future sales. This avoids the refund process entirely and significantly reduces the likelihood of a tax audit. Additionally, for businesses that will start generating VAT-liable revenues soon, as in this example, this option can be far more efficient.

Key Considerations:

• Start of operations in 2025: If the company is expected to begin invoicing shortly, carrying forward the VAT receivable may be the more practical choice.
• Sales projections: If revenues in 2025 are expected to generate significant output VAT, carrying forward provides a simpler way to manage the receivable.
• Audit complexity and risks: While audits are a standard procedure, avoiding one is often advantageous from both operational and financial perspectives.

Conclusion: The decision to request a VAT refund or carry it forward should not be taken lightly. It depends on the specific circumstances of each business, including cash flow needs, projected sales, and the willingness to manage a potential tax audit.