Value Added Tax (VAT) is an indirect tax levied on the supply of goods and services that can add between 5 – 27% to your company’s business travel expenses. It is levied at every stage in the business cycle, itemised on the invoice and paid to the government in each state with the cost ultimately borne by the end consumer. VAT was established to encourage cross-border trade from one county to another and was designed to be neutral to business if they go through the effort to recover their foreign VAT.
Applicable VAT rates vary from country to country and the tax is recognised under different names, including IVA (Italy), GST (Canada, Australia), MWST (Germany, Austria), TVA (France, Belgium) and MOMS (Scandinavia).
In order to encourage international trade, the European Union introduced legislation in the 1980s enabling businesses to claim back VAT paid on expenses incurred while doing business in member states. VAT is refunded within the EU under the EU VAT refund directive, which enables EU companies to reclaim from any member state; the 13th Directive, allowing businesses established outside the 28-member block to reclaim VAT from the EU territories. A number of key non-EU territories, including Australia, Japan, Canada, South Korea, also refund VAT/consumption taxes to the non-resident traders via specific refund procedures or under reciprocity agreements in place.
Generally, businesses can reclaim the majority of VAT paid on eligible expenses, subject to fulfilling nominal criteria. The applicable VAT rate varies from country to country, as does the list of eligible business expenditure. In some cases however 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.
Every country has specific rules on what qualifies for VAT recovery. Although the criteria vary from country to country, Taxback International’s VAT experts identify common conditions that many countries require for organisations to qualify for foreign VAT refunds.
To find out more information about different VAT rates around the world, visit our interactive VAT chart today, or get in touch.
Taxback International can secure foreign VAT refunds from 44 countries on a range of eligible expenses where they may be defined in three different groups depending on their type:
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.
In all cases, the incurred expenses shall be justified in terms of the nature of the business and this is what normally the tax authority requires the claimant to prove.
Typically, T&Es are paid through the medium of company credit cards, issued for all travelling employees and in some extremely rare cases – in cash. This is why we have designed a solution allowing credit card data transactions to be analysed so that we may provide our clients with a VAT Opportunity report even before we have reviewed the invoices (scans or originals).
AP and Intercompany invoices are normally covered through a bank transfer between the organizations.
A total of 44 countries currently provide VAT refunds, among them all 28 EU member states.
The list includes: Australia, Austria, Belgium, Bulgaria, Canada, Canary Islands, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Holland, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malta, Monaco, Norway, Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, and United Kingdom.
Visit our interactive VAT chart to get more information on reclaiming VAT from these countries.
All invoices submitted to support your VAT refund claim must be original and need to include the following information:
Date of the supply of the goods or the services;
A detailed description of the goods/services provided – the quantity and nature of the goods supplied or the extent and nature of the services rendered;
Total net taxable amount per VAT rate;
The VAT rate applied;
The VAT amount payable;
Gross invoice amount;
Please, bear in mind that:
In most of the tax countries an invoice has to show the VAT amount in the national currency of that tax country, otherwise, it cannot be used for a VAT refund.
If an invoice makes a reference to other documents (annexes, other invoices, etc.), these additional documents have to be enclosed as well.
An invoice can be used for a refund only if it is the original one. Duplicates, second printouts, certified copies, photocopies, faxed copies of invoices are not acceptable for a VAT refund. In rare cases, if the original is lost and this can be proved, a duplicate/certified copy of an invoice might be accepted for a VAT refund in some tax countries.
The invoice should always have a text/title “Invoice” on it. Documents, titled “Proforma invoice”, “Statement” and alike, are not accepted for VAT refund purposes.
Some of the countries (Hungary, Czech Republic, Poland, Latvia, Lithuania, South Korea, Greece) have more specific requirements – please contact B.I. Refund t/a Taxback International for more information if you plan to visit these countries.
Yes, where original receipts are required, we will return your original invoices after we process your VAT claim.
Taxback International can manage your organisation’s reclaim process when you supply the following documents to us:
Copies of the invoices to support your VAT claim,
Letters of Authority authorising Taxback International to represent you before foreign and, where required, local tax authorities.
Certificate of Taxable Status, where required, proving that your organisation is registered taxpayer in your home country
The originals of the invoices where required by the Tax Authorities. These will be returned to you after processing your refund claim.
All tax refunds are issued upon the discretion of the tax authorities. This being said, for claims submitted under the 8th Directive your organisation’s VAT must be refunded within 4 months as of the submission of the application. For claims submitted under the 13th Directive and other reciprocity rules, this time may be a bit longer. Actual processing time of Taxback International can also vary from country to country. Taxback International’s Clean Claims Policy means we only submit claims that have been verified for accuracy saving tax official’s time and ensuring continued strong relationships with foreign tax offices, resulting in faster refunds for your organisation.
Depending on where your costs have been incurred, you could receive your VAT refund in as little as four weeks.
Yes. The deadline depends on factors such as the country of establishment of the claimant and the country of reclaim and varies, however, the typical deadline for claims submitted under the 8th Directive would be by Sep 30 of the year after the VAT costs were incurred, and for claims lodged under the 13th Directive and other reciprocity regulations the typical deadline is Jun 30 of the year succeeding the time of the expenses on which you claim your VAT.
For more information on VAT deadlines, check out our blog here.
The frequency with which your organisation can submit a VAT rebate claim will vary according to individual countries and tax authorities. Typically, for each country where VAT was charged and is refundable, businesses are entitled to file up on a quarterly basis with a final annual application.
At Taxback International we offer a FREE VAT Analysis of your expenses, letting you know how much VAT you can actually recover from your expenses.
The Taxback International VAT Recovery Solutions are designed to fit the unique needs of companies of all sizes, offering market-leading pricing options tailored to your needs. A customised price quote will be provided based on the specific needs of your organisation.
Yes. EU companies can get VAT back too. Your business can claim a VAT refund from any EU country as long as your business is not registered in that country.
Taxback International does not operate a minimum claim threshold, we will recover all the VAT possible to put back into your bottom line. However many tax authorities impose such a threshold which we shall comply with. In most EU countries the minimum requirement for an annual claim is €50 and for a quarterly claim, it is €400. There is no maximum amount which can be claimed
More than 12,000 clients from 120 countries choose Taxback International because of its unique and innovative approach to VAT reclaim. Visit the Our Advantage section to find out why we’re world leaders in VAT refunds.
Your business is eligible or liable to VAT register in another country if you are carrying out taxable supplies in that country, and the obligation to account for VAT is not shifted to your customer. The obligation to register for VAT depends on a number of factors, such as the type of service performed, destination of the goods, status of your customer, etc.
Yes. You can still get VAT back by reporting the VAT on purchases in your VAT return in that country. This may result in either overpayment that could be claimed, or in a VAT credit that can be offset against VAT liabilities.
VAT registration is a lawful obligation that is imposed on businesses carrying out taxable supplies in a particular jurisdiction, subject to conditions. When your business chooses Taxback International to assist you with the registration and subsequent filing and reporting obligations you are comfortable that your business is VAT compliant in that jurisdiction. Businesses that are eligible or liable to VAT register in a country are not entitled to apply for a direct VAT refund from that country. However, once your business has become VAT compliant by registering for VAT, it is also entitled to claim back VAT on purchases which it would otherwise not be able to get back.
Companies have a number of obligations in the jurisdiction they are VAT registered in, such as issuing compliant VAT invoices, keeping proper records, filing VAT returns and other tax declarations on time. Engaging Taxback International to assist you and perform these activities for you will ensure that your business is VAT compliant.
International VAT can be complex, time-consuming and challenging. Our international team of tax specialists will ensure that your VAT is managed in the most effective, cost-efficient and law compliant way.
We can maximise your VAT refund by reviewing your domestic T&E expenses retrospectively for a number of years (Domestic VAT recovery);
We can ensure that your current in-house VAT system covers all necessary aspects by carrying out a VAT compliance review, VAT expense review or Expense code review;
We can train your staff on various VAT related topics;
We are your reliable ad-hoc VAT consultant.