VAT Recovery – automation of processes

VAT Recovery has for most of its life, been an involved and paper-intensive process. Of course, it is understood we deal with Governments; and they have known to be notoriously bureaucratic. Even today, many of them are steeped in cumbersome paper-work. Fortunately, we are beginning to see a little light, at the end of the tunnel. European nations see the need to cut across the processes of the past, and rapidly move into the 21st century, and the age of modern technology.

Complete automation

Automation Process - successful linking of all parties involved

It however appears that complete automation of VAT refunds is still some years away: simply because refunds are not a top priority for VAT Authorities in most countries. VAT continues to be the main Fiscal instrument of income for several governments, including some advanced EU countries. Obviously they would rather keep the VAT, than refund it. Automation of refunds, therefore, is not priority number one.

In the European Union there has been talk of unification of VAT processes. It makes good Fiscal Policy sense, even though BREXIT, and similar undercurrents in a few other countries, make any unification process more challenging. Given the various issues, unification of VAT in the EU is not going to happen in the very near future.

VAT Recovery – Going Paperless

It is common knowledge that many multinational companies are moving towards paperless environments. It will not only save trees and the environment, but also work towards more efficient intra-company processes. Many corporates commenced work on the task of going paperless, in the early nineties and are today well into their projects to do so. Governments in the Persian Gulf had also taken the opportunity to learn from others’ inefficiencies and launched their own e-Government schemes in the nineties. They did not want to make the mistakes of bureaucracies the world over. With these paperless efforts in view, there will be pressure on governments to minimise paper involved processes as well. It is a matter of time before governments fall in line, and automate their several processes.

Blazing the Trail

Leadership for the automation of VAT process will come from the EU countries. Scandinavian countries are moving towards more online processes, and it is foreseen that they may indeed be ahead of the curve. Germany has also moved the 13th directive (VAT refund involving EU countries to non-EU countries), refund mechanism to an online electronic system. It makes for partial automation of the refund process. More countries are expected to follow.

Where does all of this leave companies in paperless environments, wanting to file for, and obtain VAT refunds? Their own internal processes, have allowed for original invoices to be destroyed. They are the very documents that several governments need, to process VAT refunds. In some cases like the Scandinavian countries, all is not lost. VAT recovery companies will hopefully be able to talk to them and get them to accept scanned copies of the original invoices.


In conclusion, the move to automation of VAT processes, including refunds, will eventually have to happen. It will help both governments and companies the world over. It may take a few years, but governments will implement the required changes within their own convenient timeframes.

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© Mano Chandra Dhas

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  1. Connie Leigh


    This is a very interesting article and to a certain degree it is thought provoking that this is NOT automated yet.
    – Maybe it is not a priority as there might be a few or even “many” who do not go after the VAT refund and automating it may make is easier for those.
    – Countries that collect VAT may find themselves refunding how much more?

    • Reply

      Hi Connie, thank you for your comment. Several Millions of Dollars that could be refunded, are never claimed each year. Sometimes I cannot understand why corporates do not make the effort to recover their VAT. There is really very little they have to do, except sign a few papers and then hand over their invoices to a VAT recovery company. There really is nothing more for them to do.

      I gather from your comment that you feel that automation will make it easier for companies to become interested in recovering their VAT. As I have mentioned, complete automation is probably several years down the road. Countries of the EU have to first unify the VAT processes within their territory. At the moment there is only a minimum level of VAT charges mandated. Everything else, is left to individual countries. Of course, if VAT is charged by a fellow member of the EU it has to be refunded under what is referred to as the 8th Directive.

      Automation will have some challenges. The amount that can be refunded, is on the invoice collected by the traveller. These invoices are issued by thousands of suppliers all over Europe and do indeed reflect different percentages charged depending the service, or the country (Hotel, Car Hire, VAT on Fuel, Exhibition Space, etc). To have the reporting and consequently the refund of all those charges, can be challenging.

  2. Glen Fonseca


    VAT automation, will surely be extremely useful to all. It will make things a lot easier, and reduce a lot of time spent on follow ups. It could result in increased corporate travel.
    A very interesting and thought provoking article by Mr Mano Chandra Dhas

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