Worldwide, companies may be failing to claim up to $ 30 billion in VAT on travel expenses each year. For many, the hassle of claiming foreign VAT doesn’t seem worth the time investment, or the resources simply aren’t there to do it. Others still may not know how to go about VAT recovery and abandon the process before even starting it.
While VAT recovery can indeed be a laborious process, integrating it into your expense management system will result in considerable financial gains with little to no hands-on investment on your side. And in times like these, every single euro counts.
VAT stands for value-added tax and is also referred to as goods and service tax or GST in some countries. It is a tax on the added value provided by every party in the supply chain. This tax is applied to the purchase of various goods and services and generally included in the final price paid by the business or consumer. VAT is most common in the European Union but also exists in 100+ other countries such as Australia, Canada, India, and South Africa.
Different VAT rates are applied by the countries and for different types of goods, but overall, the average VAT rate is about 15%.
Organisations whose business travellers are charged VAT or GST may be entitled to a refund by the visited country’s authorities.
For an expense to be eligible for a VAT refund, it must fall within the allowed types of expenses for that country and be accompanied by complete, accurate documentation (i.e. receipt or invoice).
In Europe, the refund must be claimed via the authorities in the country where the business is based, these will then pass the claim on to the authorities of the country where the expense was incurred.
You can recover VAT from all sorts of expenses, not just travel and entertainment. Some of the most commonly eligible expenses include:
The two main issues with recovering foreign VAT yourself are
Despite harmonisation at the EU level, the VAT recovery procedure remains cumbersome. Different guides exist for each country and different forms must be filled following the national rules of each. Because of this, many organisations believe that the time spent chasing after a VAT refund is not worth it unless their foreign expenses are fairly high. Small and medium organisations often won’t pursue VAT recovery due to a lack of resources and are thus leaving potentially sizeable sums behind.
Another blocker when attempting to recover VAT is incomplete documentation. If an invoice doesn't feature the supplier's VAT number for example, VAT won't be claimable on that expense regardless of whether it is eligible. Obtaining complete and compliant documentation requires follow up which can be time intensive and perceived as having a very low return.
Integrating your choice of VAT recovery partner with MobileXpense is a simple two-step process which consists of selecting your partner and providing us documentation attesting your relationship with them.
Once that is done, everything is taken care of for you, from obtaining complete records to the filing.
At no point in this process are your financial department’s resources involved, leading to a fully detached approach with zero risk.
By integrating a VAT recovery partner with your EMS, you are guaranteed
And, as VAT recovery agents function on a “no cure, no pay” basis, you only pay a percentage on the recovered VAT. If you don’t recover anything, you also don’t pay anything.
Avoid leaving money behind and increase profitability today by integrating VAT recovery into your expense management system. We are certain that you will only benefit from hassle-free automated VAT recovery and putting money back into your bottom line.
We are proud to have partnered with a number of companies who will provide you with the recovery services to fit your needs. You can look through them here: