Imagine combing through a storage room of banker boxes piled with paper receipts to determine if your company has a potential VAT refund due on Travel & Expense spend. Many customers express, they just don’t have time to collect paper receipts, even though they know they are likely entitled to a VAT reclaim every year.Would you want to know if your company is leaving funds behind?
Small to global-sized organizations that do business internationally are eligible to reclaim VAT on business purchases including travel expenses like hotels and events as well as, goods and services purchased in other countries.
Let me first explain what Value Added Tax (VAT) entails. It is simply the tax levied on sales or transaction of goods and services which can prove to be complex and challenging when it comes to understanding specific rules and regulations. It is a reclaimable tax as part of the EU Legislation (EU VAT directives) which allows organizations to reclaim the VAT on business expenses incurred and in accordance with non EU countries which offer reciprocity and 43 countries worldwide that offer refunds. If you have business travellers in these locations, it is very possible you could recover significant VAT funds.
Many organizations have the resources in place to accurately assess and manage their own VAT liability to ensure VAT compliance. We typically see on average clients recovering approximately 20-30% of their VAT spend. However, when they optimize their Concur data with Taxback International, this number often increases to 60-70% of VAT recovery. We understand that T&E VAT reclaim is complex with diverse rules and regulations, but having transparency into the spend allows us to better manage the recovery process.
You may be curious to learn what types of expense are refundable?
43 countries worldwide (all of the EU) permits VAT reclaim on business expenses. The average VAT rate is 20% of the total expense on recoverable expenses which may include:
- Accommodation & Meals
- Fuel & Transport
- Marketing & Advertising
- Events & Exhibitions
- Client Entertainment
- Inter-Company Expenditure
- Professional Services
- Accounts Payable Supplier Invoices
- Domestic Flights
Challenges to successfully reclaiming VAT.
‘An estimated €20 billion in VAT goes unclaimed by companies each year and instead of finding its way back to your companies bank account it remains in the treasuries of the European Union States’ As this stat proves VAT reclaim is definitely worth the time and effort. However there are a number of challenges which need to be overcome to ensure successful VAT reclaim.
- Complex and diverse VAT legislation: Each Tax Office has its own VAT recovery rules and accepted practise in relation to VAT reclaims.
- Invoice Compliance: Each tax country adheres to strictly enforced rules in relation to what information and invoice or receipt must contain to ensure it is complaint for VAT reclaim. This means that each and every eligible invoice/receipt must be audited to ensure compliance.
- Lack of staff time and expertise: Most organizations have limited resources when it comes to carrying out VAT compliance audits on their T&E transactions.
- High rates of rejected claims: While VAT reclaim is written into law subject to compliance criteria each Tax office audits claims robustly. If a claim is not complaint it will be rejected and the VAT reclaimable will be lost.
- Anecdotally we know that the average company will have an incompliance rate of between 60 and 70% of T&E transactions. The typical reasons are invoices in the name and address of the employee and not the company. Non VAT invoice or receipt, typically this is a credit card receipt or statement.
A quick example
Let’s imagine a company has 5000 employees spread across 3 regions, 20 countries and 30 offices. Each country has their own Tax authority, VAT rates and set of rules and regulations on what VAT can be recovered on. Starting to sound complicated? To further confuse things, each Tax Authority operates though its own language. Not only do the VAT rates change but the Tax authorities have their own VAT claim submission methods.
To increase the VAT recovery and compliance on T&E spend, companies and employees must have a good grasp on the current regulations and VAT rates for each country they are travelling to. Achieving transparency across multiple jurisdictions alongside long term savings can be a difficult process, however those that are committed to managing their expenses are able to make long term cost savings, cutting the cost of Travel & Expense by 20% on average. It’s been our experience that companies who reclaim VAT on their T&E expenses in-house achieve a success rate of approximately 10% of their VAT reclaim potential. That figure grows to 30% in year 1 when they outsource VAT reclaim to Taxback International.
We partnered with Concur to revolutionise the landscape of T&E VAT Reclaim. We have achieved this thanks to Concur’s seamless access to expense data and Taxback International’s experience, expertise, proprietary software and automation.
We ensure VAT compliance and maximized VAT refunds for clients of all sizes from SMB’s to Global multi-national organizations. Our services are streamlined, multilingual, based on the latest international VAT laws and implemented by experienced VAT specialists. Most importantly, we ensure a touchless solution ensuring little to no effort from our clients.
Taxback International has designed the Fast Track VAT App in the Concur App Center to allow Concur clients to easily access their VAT refund potential. We securely download expense data from Concur to provide Concur customers with their VAT reclaim potential.
Here is what customers have to say:
“The implementation process was very straight forward given their knowledge of VAT reclaims on Travel expenses. Taxback International has a proactive approach to maximising out VAT refunds by identifying both missing and incompliant VAT invoices from expense claims and have a specialist team to retrieve them directly from supplier, ensuring increased refunds.” Sylwia Lobodziec, Senior Manager EMEA VAT, Symantec
“The Taxback solution delivers exactly what we need. Concur leverages Taxback International’s integration to seamlessly recover foreign VAT on expenses that otherwise would go unclaimed. The end-to-end process is simple.We make certain they have access to our system and provide the bank details for appropriate refunds.” Ryan Angell, Senior Manager, Tax, Global Finance at Concur
See how Taxback International made VAT reclaim easy for Warner Music:
It is easy to start reclaiming the VAT on your travel and expenses. To get started, simply let us provide you with a free analysis of your potential VAT recovery. Simply inquire about Taxback International and Fast Track app via the Concur App Center and we will be happy to get you on your way to VAT recovery.
About the author: Joe Healy, Director of Strategic Partnerships, Taxback International Joe has over 14 years’ experience in business development, supporting clients ranging from start-ups through to multinationals. He has driven business development and Partner integration at Taxback International for 6 years. During his tenure Taxback International has become one of the dominant global VAT refund provider in the market. Taxback International supports over 12,000+ corporate clients in 107 countries, many of which are members of the Fortune 500. Joe holds a Bachelor of Business Studies and Marketing degree (BBS) from the Institute of Technology Tralee, in his home County of Kerry, Ireland.