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How much VAT can you claim from a business trip?

Significant expense is generated by employees during their business trips. Employees traveling abroad leave VAT revenue, which often remains unclaimed every year. A large amount of this VAT is lost due to submission of incorrect or incomplete invoices. The company may opt to pay the employee but still will not be able to reclaim the paid VAT leading to large amounts of money lost year after year.

To recover these funds, it can be very easy just by following the simple rules and guidelines given to ensure they lawfully reclaim the VAT due to the company. In the past few years, a number of simple guidelines have been put forward by experts to assist employees to reclaim VAT once they have traveled for business abroad. These guidelines ensure that proper invoices for all their expenses are submitted.

These basic general guidelines are;

1. Ensure that you bring back the original invoice only. An original invoice will be written. 'Invoice' on it either in English or the native language. A copy is not acceptable without a VAT invoice hence it's important to claim the VAT invoice.

2. Ensure to check the legal entity name and official address are correct on all invoices. Any invoice showing just the name of a department without the official company name is not entitled to VAT refund. Employee's home address is not acceptable either; just ensure that the official company name is on the invoice. To also have an advantage, when checking out of the hotel room, make sure to give the receptionist with your business card. This will ensure that the official company name and address is input on the invoice.

3. This guideline applies to simplified invoices where there are additional invoice requirements - Specified recipient details and VAT amount do not necessarily have to be mentioned. In cases of smaller invoices say for expenses of taxis, restaurant and public transportation you can g=have VAT breakdown. Confirm that details like the invoice number and date are included. Then check together with the VAT indication. Also where the invoice is more than one page make sure that you submit all pages.

4. Some specific countries have special requirements whereby they require that all invoices have the company name. These include the smaller invoices from restaurant bills and public transportation. Ensure that the cashier includes it as you must show proof of payment. When in these countries ensure to keep your invoices and payment vouchers well.

Following these guidelines makes it easier for your organization to have control over tax and expenses accrued this, in turn, ensuring utmost transparency. Hence it's more eligible to reclaim VAT refunds. To better on this, most companies have implemented VAT box. VAT box is an automated, enterprise-wide, cloud-based recovery solution that streamlines the worldwide reclaiming process.

VAT Box allows companies transparency on all paid taxes, conferences, hotels, restaurants, transport, car rental and fuel expenses.

Recovery of VAT can be a very tedious and complex process. To better the process the following tips will be very applicable to the challenge;

  • A company has a chance of reclaiming VAT if it does incur foreign VAT during purchases of services. With this ensure to change the place where tax is imposed for the invoicing of services.
  • All expenses linked to transport are bound to VAT in the country offering service. Companies should reclaim the tax from tax authorities of that country.
  • Economic costs expenses should not be neglected as they represent a significant factor in the economy. VAT rates continue to increase at a high rate hence optimal budget of this should be considered
  • Awareness of the VAT recovery procedure which is usually either electronically or manually. An application form fully completed together with any additional documents directly to the tax authorities of the refund country. In which both procedures should have detailed listing of invoices and tax receipts.
  • Follow all rules and guidelines given.
  • In the case where the foreign administration refuses the claim, it will be very beneficial to get an expense claim management system. This will give a full and clear transparency of all expense notes for reclaim. In cases where they claim inaccurate charges the supplier should be contacted.
  • The timescale put for processing is four to six months. However, some countries may take longer up to eight months in which case if they take longer than that there is a regulatory mandate for them to pay extra.
  • VAT recovery is integrated into the company's accounts according to the company's rules and is broken down according to the type of expense.
  • Also, companies experiencing difficulties can receive support from VAT specialists.
  • Finally, a utilize expense claim management system can be very advantageous. This is to help the company complete transparency of employees expense notes even as know how much VAT they can reclaim from their business trips.

Holiday Extras Ltd is authorised and regulated by the Financial Conduct Authority. Registered address: Ashford Road, Newingreen, Kent CT21 4JF. Company number 01693250.

Holiday Extras is underwritten by Travel Insurance Facilities plc which is authorised and regulated by the Financial Conduct Authority. Registered address: 2nd Floor, 1 Tower View, Kings Hill, West Malling, Kent, ME19 4UY. Company number 03220410.