Businesses can avail of VAT reclaim to boost their cash flow during Covid-19 crisis
Families, businesses and governments globally are in unchartered territory. The Covid-19 crisis has escalated at an alarming rate leaving many business owners worried about how they will get through the coming weeks and months.
VAT reclaim is not a solution to the current Coronavirus pandemic, but it can be utilised by businesses globally as a quick and easy cash injection to keep businesses of all sizes afloat.
What type of expenses can I claim a VAT refund on?
Businesses can reclaim VAT on a range of eligible expenses, which can be defined in three different groups:
T&E (Travel & Entertainment Expense) relate to business expenditure incurred by travelling employees while doing business abroad. Typical T&E would be accommodation, meals, transport costs, marketing costs, costs incurred in relation to participating in an event, an exhibition or a conference, etc.
AP (Account Payable invoices) itemize a transaction between a buyer and a seller and typical examples would relate to professional services, equipment, consulting & legal fees, research & development.
IC (Intercompany Expenses) refer to internal transactions between two associated companies who file a consolidated tax return or financial statement. Good examples would be office expenses, legal costs, cross-border sales/indirect goods, administrative/financial support, international project, international infrastructure charges, warranties and so forth.
For more information, check out our FAQ section.
How much VAT can I reclaim?
Generally, businesses can reclaim the majority of VAT paid on eligible expenses, subject to fulfilling nominal criteria. The applicable VAT rate vary from country to country, as does the list of eligible business expenditure. In some cases only a partial recovery of the VAT amount paid is allowed. These partial recovery expenses are usually related to passenger cars, accommodation, meals and business entertainment. For example, Belgium refunds 50% of VAT paid on the expenses related to passenger cars, while in Denmark businesses can only claim back 25% of the VAT they have been charged on meals.
How can I get started?
Taxback International is ready to help organisations who will need an income boost as a result of this crisis. Last year’s VAT is available to reclaim and could make all the difference to keeping some businesses afloat.