Companies are entitled to recover a significant portion of value-added taxes. Yet they often ignore the expense, and that disregard costs them: VAT adds up to roughly 5% of total foreign travel spend for businesses across the globe.
The reasons businesses have shied away from VAT reclaim are explained in VAT Reclaim: Don’t Leave Money on the Table, recently published by BCD Travel. The paper and infographic draw on expertise from BCD Travel and Taxeo, BCD Travel’s VAT recovery partner for European Union transactions.
Taxeo provides BCD Travel customers with in-depth expertise and a unique paperless system that connects to hotels, car rental companies and other suppliers their business travelers use. The automated system removes manual labor from VAT reclaim, simplifying the process. The result is greater VAT recovery than even large multinational businesses can accomplish on their own.
The VAT Reclaim paper details these tools and processes and offers complementary short- and long-term strategies that companies can use to recover VAT. Here are some ways to get started recouping what you’re owed:
Understand what you’re missing
Carry out a sample audit of the expenses paid by your company that incur recoverable foreign VAT, and assess what percentage of that figure actually has been recovered. Remember to check invoices sent to company departments (e.g., for trade shows), as well as the expense claims of travelers. (Some expense management systems provide a report specifically for this purpose. See more on that below.)
Position your program for VAT savings
Steer clear of daily allowances. Allowing travelers to spend what they like within a daily cap limits your ability to recover VAT because travelers with allowances have little incentive to collect compliant invoices. Switch instead to post-trip expense claims.
Educate your travelers
Communicate to travelers the importance of collecting VAT-compliant invoices. For example, they should make sure their hotel supplies an invoice showing the name and address of your company, not the traveler’s own name and personal address.
Leverage your automated expense management system
In addition to many other benefits, automated expense systems often break out the VAT elements of each item. If your traveler isn’t provided an electronic invoice, encourage them to digitize a paper copy using a mobile app. That will simplify VAT recovery later on.
Talk to your suppliers
Get your vendors involved. Explain to them the importance of providing VAT-compliant invoices.
Want to know more? Download the VAT Reclaim paper and infographic. Then ask your account manager how BCD Travel and Taxeo can help you recoup money you’re leaving on the table.