What is Value Added Tax (VAT)?

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 the 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).