The deadlines for submitting your documents for VAT recovery from the EU and other countries are fast approaching – mostly June 30. This is when US-based businesses that engage in overseas travel for business, often drop the ball.
With a simple process in place, defined by the company’s travel policy, US-based businesses can easily recover up to 25% on some of their overseas business expenses. However, we often find that businesses are unaware they are entitled to these refunds or don’t know where to begin.
With some help, VAT Reclaim can be an effortless process, and that’s what we aim to do for our US clients, here at Coromandel SAS. Let’s walk you through what you stand to gain from this process.
What is VAT Recovery?
U.S. businesses can recover a considerable part of the VAT (Value Added Tax) paid on expenses during business trips to many EU countries.
VAT is a consumption tax charged on goods and services in most countries, internationally. When U.S. executives travel to the EU for business, they pay VAT on items like hotel accommodation, meals, transportation, conference participation etc. By retaining receipts (what we call invoices), and following the right process, businesses can file claims to reclaim a good portion of the VAT paid.
Each country has varying rates and processes specific to their needs, but many allow for non-resident businesses to reclaim the VAT paid on various expenses during business trips. Up to 25% can be reclaimed on many expenses, in certain countries.
Why US Businesses Should Reclaim VAT on Business Travel Expenses
Billions of dollars of VAT are left unclaimed each year. It is estimated by reliable sources that up to US$ 30 Billion is left unclaimed worldwide on refundable VAT incurred on Business Travel (estimated to be $1.6 Trillion in 2020). 54% of VAT that could have been refunded is left unclaimed. A significant amount of the estimate is left behind by US businesses in the hands of EU and other governments, simply by failing to reclaim what is theirs. Once the deadline has lapsed, the opportunity has been lost forever.
We help such US-based businesses reclaim these funds with little to no hassle, once a simple set of policies has been put into place to streamline the process.
Companies, both big and small, can benefit from the process, with more money in their pockets for other expenses, or increasing their profit margins. We’ve seen a single large company in the US recover up to $1 million in a single year! That’s not an insignificant sum for any size of business.
Why Do US Companies Fail to Recover VAT on International Business Travel, Consistently?
The main reasons for US companies in failing to recover what is legitimately due to them are lack of knowledge, resources and/or technology.
If there are such significant savings to be found, surely every US Business must have an internal process to do this, right? While the theory is simple, there may be quite a few administrative challenges that must be tackled on an invoice-by-invoice basis. It sometimes necessitates phone calls in the local (European) language, and a knowledge of local laws, processes, and etiquette.
It’s not very difficult, but it’s not an insignificant hurdle either. Specific knowledge and skills are needed to be successful. That’s where a company like Coromandel SAS can make things easy for you, and increase the rate of success for VAT Refunds.
No fixed costs, No overhead, No risk
When a specialist VAT recovery partner like us takes over your VAT reclaim process, all you have to do is to hand over the original invoices that your employees have collected when overseas, we then go to work. We check the documents that are required by European laws (the requirements can differ from country to country), ensure all supporting documents are in order, fill up all necessary forms and file the refund application with the relevant VAT Authority. All this has to be done before specified deadlines or the refund opportunity would have lapsed.
When it comes to paying for our services, we work on a contingency basis, so no result means no pay. We take no cash out of your pockets but it is our goal to put significant sums back into your pockets instead.
Connect with our expert team today to understand what you could potentially get back from your overseas business travel expenses. Allow us to get on your side to make this happen today.
Some VAT Recovery Deadlines
Now, at the beginning of this article, we indicated that some VAT reclaim filing deadlines were approaching for foreign VAT recovery. So that you have a clear idea of how much time is left, here is a list of some key filing dates by region.
US Businesses – EU VAT
EU rules state that for all non-EU businesses (such as US-based businesses), invoices and receipts related to expenses incurred within the EU during the previous year, from January 01 to December 31, need to be submitted by June 30 the following year.
US Businesses – UK VAT
UK refund regulations state that, for US companies and businesses outside the EU incurring expenses in the UK, invoices and receipts for expenses during the refund period from July 01 of the previous year to June 30 of the current year, must be submitted before December 31.
VAT and VAT Reclaim Related Resources:
• What is VAT? - Source: European Commission
• VAT Refunds for Cross-border Transactions - Source: European Commisssion
• What is the difference between VAT Reclaim, VAT Recovery and VAT Refund © Coromandel SAS
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