Every year, organisations are losing large sums of money because they lack a reliable VAT recovery process. While shifting towards electronic processing may represent an initial hurdle for businesses and governments, over time, reporting and compliance will increase, and companies will gain from becoming more adaptable.
Large companies that use VAT recovery may find it self-evident to do so. However, the time and resource-consuming nature of VAT recovery can cause smaller businesses to simply give up on it. If you are among the latter, here are four reasons you should reconsider and start recovering foreign VAT.
Automated VAT recovery can easily be integrated into your expense management solution (EMS). The spend data from your EMS is regularly sent to the VAT recovery partner of your choice who processes your claim.
The visibility comes from having a view not only on your travel and expense data within your EMS, but also on your VAT data through dedicated dashboards and analytics. Reporting provides ongoing visibility into the status of your claims while analytics give you insights on your potential for further VAT recovery. The available data even supports you in analysing any gaps you may have to increase your compliance rates year on year, and therefore your VAT recovery.
With increased visibility, you can make strategic financial choices based on real data rather than speculation, leading to better decisions with improved results. And in our books, any financial improvement is worth its weight in gold in uncertain situations such as the one we are currently navigating.
With rates ranging from 5% to 27% between 126 countries and different rules, requirements, and deadlines to abide by, VAT recovery can be a very complex financial process. But given that on average 4-10% of any given business’ spend is eligible for VAT refund, it’s well worth diving into. Which is not to say that you should undertake the task all on your own or overwhelm your financial department with requests to recover foreign VAT.
VAT recovery specialists make it their business to know the ins and outs of VAT regulations around the world, no matter how much they may change. These specialists align with in-country sources and tax experts to ensure they have the knowledge to accurately process your claims, allowing you to focus on your own added value and business needs.
Compliance is also guaranteed with automated data and image collection. Artificial Intelligence (AI) and machine learning algorithms automate and check the receipts and invoices input by users. Experts then validate the data and its accuracy before moving the claims forward for processing, ensuring that only complete claims are submitted.
The entire process, from data extraction to submission, is fully automated between your EMS and VAT recovery partner. This means your users aren’t spending a lot of time entering expense claims, and your accounting team isn’t poring over claims to properly categorise the spend, split the VAT and allocate everything to the correct G/L account. And no one is combing through the combined data to identify VAT recovery potential.
The time your team isn’t spending on data submission and extraction is time they are spending on their value-added tasks. The time savings and benefits of automating VAT recovery are proportional to spend and are therefore considerable whatever the company size. Let your team and business benefit from increased profitability by automating your foreign VAT recovery.
VAT recovery experts operating in Europe are GDPR compliant, meaning your data is safe with them. They also hold relevant certifications such as ISO 27001 relating to information security.
Not only is your data safe, but so are your finances. Thanks to the combination of AI and expert knowledge, VAT recovery agents ensure that only accurate, compliant claims are filed with the authorities, which means no fines for missing documentation or non-compliant claims.
Only filing complete claims can drastically increase recovery results. Furthermore, VAT recovery agents may sometimes act as consultants, advising you on changes that can increase your recovery potential. These changes can be something as simple as booking hotels centrally to ensure that your company name and VAT number are on the invoice rather than the traveller’s name, ensuring that VAT can be recovered on that invoice. Or it can go as far as contacting suppliers of non-compliant invoices to have these reissued to be compliant with the VAT recovery process.
What are you waiting for?
If increased visibility, guaranteed compliance, time savings and optimal results are not quite enough to sway you, consider this: most VAT recovery agents work on a “no cure, no pay” basis, meaning if they do not recover your VAT, you don’t pay them. Integrating a complete T&E solution can also support VAT recovery. Through T&E, the “free money” you recover from VAT goes straight back into your company accounts to make strategic investments that will help secure your position in the market.