For the average organization, T&E (travel and expense) is the second largest annual budget item, second only to payroll. A significant portion of this spend, however, may be recoverable in the form of Value Added Tax (VAT) reclaims.
What is VAT?
VAT is a type of tax levied on goods and services. While the U.S. doesn’t implement a VAT tax, most other countries do. So, when an employee of a U.S. company travels to a country with a VAT tax, they’re paying tax on travel expenses like hotels, taxis, trains, and meals.
The good news is that VAT recovery is possible in more than 40 countries around the world, including major business travel markets. For companies with employees that travel to any of those countries, a percentage of tax in many expense types can potentially be reclaimed.
The bad news is that the reclaim process can be difficult and time consuming. In the European Union alone, 28 countries exercise VAT reclaim, each with its own set of constantly changing recovery rules. This year alone, China, Saudi Arabia, South Africa, UAE, and others have enacted new VAT rules. On top of changing regulations, many companies simply do not have the resources and trained personnel to undertake hours of receipt and data gathering, manual data transfers, language translations, currency calculations, and more.
For example, VAT rates vary from country to country and expense type, plus each country requires refund documents to be completed in their local language. A survey from the Organization for Economic Cooperation and Development found more than 70% of businesses surveyed found reclaim procedures difficult to navigate, and 20% were unable to recover any VAT expenses at all. In fact, half of the respondents recovered 50% or less of the foreign VAT they incurred. GBTA expects business travel spend to reach $1.7 trillion by 2021, and with VAT rates as high as 27%, this can equate to big money for businesses. In fact, it’s estimated that millions are left on the table each year by businesses.
Time is running out
For U.S. companies with employees working in or traveling to countries where VAT recovery is possible, an important deadline is approaching. June 30, 2018 is the final day to reclaim VAT tax for calendar year 2017. Thankfully, it’s not too late!
How the SAP Concur App Center can help
An integrated solution simplifies the tedious VAT recovery process, while intelligent automation ensures a maximum VAT refund. The true value of an integrated solution lies in the ability to leverage your existing T&E data to seamlessly and effortlessly process and route eligible transactions into a VAT-ready report
If you are an SAP Concur client, you’re in luck. We partner with industry leading VAT solution providers to extend the value of our platform through the SAP Concur App Center. Our partners provide pre-built solutions that connect directly to Concur Expense, Concur Travel, and Concur Invoice. Data acquisition happens securely in real time, eliminating manual processes and creating efficiencies for finance and accounting departments who don’t have to spend time tracking down the myriad of details required for each claim.
SAP Concur clients who have engaged with one of our VAT reclaim partners typically experience a significant increase in VAT reclaims. Have a closer look at how it works with two of our partners, Taxback International and VAT IT.
Taxback International recently launched VATConnect – 1Click, an end-to-end VAT reclaim solution delivering a free, no-obligation VAT analysis in 1click in under three hours. Clients receive a complete report including details on spend broken down by country and expense types, helping identify total potential eligible and ineligible VAT. Taxback International can also manage full VAT refund claims from any country in the world. They also provide automated travel alerts, notifying employees of VAT opportunities on upcoming travel itineraries linked to Concur Travel. Electrolux, a global leader in household appliances and appliances for professional use, tripled its VAT reclaim using Taxback International in only one calendar year. Refund savings jumped from an average of €18-20K per year, to €75K the first year they introduced the solution into their organization.
One click is all it takes to begin utilizing SAP Concur’s intelligent data combined with Taxback International’s proprietary software and VAT experience, to save time, drive smarter savings, and improve visibility into AP invoicing. – Joe Healy, Director of Strategic Partnerships at Taxback International.
VAT Cloud from VAT IT is an end-to-end VAT recovery solution for business travel, supplier invoices and more. It streamlines and automates VAT recovery with a smooth, click-through integration. SAP Concur clients can simply sign in via the SAP Concur App Center for a real-time VAT analysis at the touch of a button. With a simple activation process, VAT IT streamlines the entire VAT reclaim process with one cloud-based solution.
We find that most companies today aren’t doing VAT reclaim at all, or if they are, they eventually stop because of the complexity of VAT rules and a lack of internal expertise. At VAT IT, we work with thousands of companies across the world to save costs at the click of a button. VAT Cloud from VAT IT makes it easy for SAP Concur clients to unlock cash savings fast, with guaranteed 100% compliant tax refunds. – Ben Finkel, Managing Director, VAT IT
How to save
If you’re already using Concur Expense or Concur Invoice, you can gain massive efficiencies and ensure you’re compliant by connecting that data directly with one of our VAT partners. It’s a no-brainer and an easy sell in to executives in your business, because you can show a real dollar value and produce real savings that directly benefit your company’s bottom line within the first year.