4 Benefits Of VAT Reclaim You Need To Know

3 min read
Jan 20, 2023

Every year, organisations are losing large sums of money because they lack a reliable VAT reclaim process. While shifting towards electronic processing may represent an initial hurdle for businesses and governments, over time, reporting and compliance will increase, and companies will gain from becoming more adaptable.

Large companies that use VAT reclaim may find it self-evident to do so. However, the time and resource-consuming nature of VAT reclaim can cause smaller businesses to simply give up on it. If you are among the latter, here are four reasons you should reconsider and start reclaiming foreign VAT.

1. Visibility

Automated VAT reclaim can easily be integrated into your expense management solution. The spend data from your solution is regularly sent to the VAT reclaim partner of your choice who processes your claim.

The visibility comes from having a view not only on your travel and expense data within your expense solution, but also on your VAT data through dedicated dashboards and analytics. Reporting provides ongoing visibility into the status of your claims while analytics give you insights on your potential for further VAT reclaim. The available data even supports you in analysing any gaps you may have to increase your compliance rates year on year, and therefore your VAT reclaim.

With increased visibility, you can make strategic financial choices based on real data rather than speculation, leading to better decisions with improved results. And in our books, any financial improvement is worth its weight in gold in uncertain situations such as the one we are currently navigating.

2. Guaranteed compliance

With rates ranging from 5% to 27% between 126 countries and different rules, requirements, and deadlines to abide by, VAT reclaim can be a very complex financial process. But given that on average 4-10% of any given business’ spend is eligible for VAT refund, it’s well worth diving into. Which is not to say that you should undertake the task all on your own or overwhelm your financial department with requests to reclaim foreign VAT.

VAT reclaim specialists make it their business to know the ins and outs of VAT regulations around the world, no matter how much they may change. These specialists align with in-country sources and tax experts to ensure they have the knowledge to accurately process your claims, allowing you to focus on your own added value and business needs.

Expense report compliance is also guaranteed with automated data and image collection. Artificial Intelligence and machine learning algorithms automate and check the receipts and invoices input by users. Experts then validate the data and its accuracy before moving the claims forward for processing, ensuring that only complete claims are submitted.

3. Time saving

The entire process, from data extraction to submission, is fully automated between your expense management solution and VAT reclaim partner. This means your users aren’t spending a lot of time entering expense claims, and your accounting team isn’t poring over claims to properly categorise the spend, split the VAT and allocate everything to the correct G/L account. And no one is combing through the combined data to identify VAT reclaim potential.

The time your team isn’t spending on data submission and extraction is time they are spending on their value-added tasks. The time savings and benefits of automating VAT reclaim are proportional to spend and are therefore considerable whatever the company size. Let your team and business benefit from increased profitability by automating your foreign VAT reclaim.

4. Minimal risks, optimal results

VAT reclaim experts operating in Europe are GDPR compliant, meaning your data is safe with them. They also hold relevant certifications such as ISO 27001 relating to information security.

Not only is your data safe, but so are your finances. Thanks to the combination of AI and expert knowledge, VAT reclaim agents ensure that only accurate, compliant claims are filed with the authorities, which means no fines for missing documentation or non-compliant claims.

Only filing complete claims can drastically increase reclaim results. Furthermore, VAT reclaim agents may sometimes act as consultants, advising you on changes that can increase your reclaim potential. These changes can be something as simple as booking hotels centrally to ensure that your company name and VAT number are on the invoice rather than the traveller’s name, ensuring that VAT can be reclaimed on that invoice. Or it can go as far as contacting suppliers of non-compliant invoices to have these reissued to be compliant with the VAT reclaim process.

What are you still waiting for?

If increased visibility, guaranteed compliance, time savings and optimal results are not quite enough to sway you, consider this: most VAT reclaim agents work on a “no cure, no pay” basis, meaning if they do not reclaim your VAT, you don’t pay them. Integrating a complete travel and expense management solution can also support VAT reclaim. Through this tool, the money you reclaim from VAT goes straight back into your company accounts to make strategic investments that will help secure your position in the market.