Late VAT refunds: when are you entitled to interest?

The European rule: one deadline, different interest rates

When reclaiming foreign VAT, a uniform European deadline applies. The country of refund must decide on your application within 4 months, followed by payment within 10 working days. If the country exceeds this deadline, you become entitled to interest.

This deadline can be extended when the country requests additional information. If the tax authority requests further documentation, the decision must follow within 2 months of receiving that information, with a minimum of 6 months from the original application. If additional information is requested a second time, the decision period extends to a maximum of 8 months. Only after this (extended) period has elapsed does entitlement to interest on a late VAT refund arise.

However, the interest rate itself is not harmonised across the EU. The country applies the same rate it uses for late VAT payments by taxpayers themselves. As a result, the level of VAT refund interest varies significantly between EU countries. The Netherlands and Germany are two countries where this is regularly relevant in practice, as the processing of refund claims can take longer than the statutory deadline.

The Netherlands: two forms of interest around VAT refunds

In the Netherlands, interest can apply at two different points in the process.

Goodwill interest for delays in forwarding

Are you a Dutch company reclaiming VAT from another EU country? The Dutch Tax Authority first forwards your application to the country of refund. If this forwarding takes longer than 15 days, you may be entitled to goodwill interest ("coulancerente"). This interest amounts to 2.5% per year and specifically compensates for the delay in this Dutch intermediate step, separate from the European decision deadline of the receiving country.

Collection interest for late payment

Is the Netherlands itself the country of refund, and is the applicable European deadline exceeded? Then the Tax Authority pays collection interest ("invorderingsrente"). This rate has been 4.3% per year since 1 January 2026, an increase from the previous 4%.

Germany: 0.15% per month, not 0.5%

In Germany, the Vorsteuervergütungsverfahren, the procedure for foreign companies, applies a statutory interest rate. Since 1 January 2019, this has been 0.15% per month, equivalent to 1.8% per year. This rate still applies in 2026.

A common misconception is that the German interest rate is still 0.5% per month (6% per year). That rate applied up to and including 2018, but was declared unconstitutional by the Federal Constitutional Court for later periods due to the structurally low interest rate environment. Since then, Germany has applied the lower rate.

The interest period for the German VAT refund begins after four months and ten working days have elapsed from receipt of the application by the BZSt, and runs until the day of payment. Here too, if the BZSt requests additional information, this period can be extended in line with the European rules.

In Germany, interest is only awarded for full months and only above a minimum amount. A short delay of a few days therefore does not result in an interest payment.

Why this matters for your foreign VAT refund

The Netherlands and Germany are among the EU countries where the processing of refund claims regularly takes longer than the statutory deadline. In these cases, entitlement to interest on a late VAT refund often arises in practice.

For larger refund amounts or structural delays, this interest, despite the modest rate, can add up to a meaningful amount.

Let professionals guide you

Keeping track of European and national deadlines, and recognising the correct interest rate per country, requires specific knowledge of the foreign VAT refund procedure. Delta Refund Solutions monitors on your behalf whether a refund is taking longer than permitted.

Feel free to contact us, we are happy to help.