Subject to local tax rules, companies can recover the VAT incurred on domestic business purchases (through their local tax return), and also in certain foreign countries (by making a refund claim). VAT rates range anywhere from 0% to 27%
Typical cross-border recoverable expenses are: conferences and events, hotel and local transportation, car rentals, food and restaurants, phone and internet charges, expenses linked to real estate, and other expenses in special cases.
Most companies do not recover cross-border VAT: each year €5.5 billion of VAT is not claimed out of €7.5 billion.
VAT on T&E in general is not well recovered, even nationally. This is due to the way most companies handle these expenses, with a process separate from general accounting. Most employees must prepare “expense claims” periodically, most often monthly, and do not specify the amounts of VAT included in their expenses, or without enough detail.
It is not only difficult to retrieve the relevant invoices or receipts from expense claims. Even companies using expense management solutions find out there is another significant issue: often receipts and invoices are not tax-compliant, mostly because they are generally invoiced in the name of the traveller instead of the company.
Finally, for non-EU companies, the final blow is the need for original invoices to claim VAT back. These are often destroyed after having been scanned, or are scattered across various locations, making significant VAT reclaims totally impractical.
Recovering VAT in the traditional way is a complex and time-consuming process.
To claim their VAT, companies must submit compliant invoices to the tax authorities where the expenditure was incurred. Non-EU companies must submit only original invoices. VAT rates, VAT refund rules and registration requirements vary from country to country. The process is technical, long and the outcome is somewhat uncertain.
That is why large companies contract specialised recovery agencies to recover their VAT: they gain time and money, as they only pay success fees.
Taxeo is the most innovative recovery agency
Thanks to its unique solution, eRefund, Taxeo ensures the highest refund rate on business travel expenses and guarantees a smooth, transparent and low cost process to its clients.
Taxeo offers an innovative, end-to-end VAT recovery solution for business expenses in the European Union, Switzerland and Norway. It handles all communications and claim filings with local tax authorities.
- Companies save up to 20% on travel expenses, supplier invoices and events and conferences
- Taxeo guarantees the compliance of e-invoices with the relevant local VAT regulations
- Success fees: clients only pay for succesful refunds