Companies are losing out on vast amounts of money in unclaimed VAT due to the European rebate system, that over a fifth of companies say they are unable to claim back through. In fact, as much as $20bn in VAT could be lying unrecovered by companies globally, our research has shown.
Time is precious to businesses everywhere, so it is understandable that collating receipts and expense forms for every cross-border venture undertaken is a less than an appealing activity.
Not to mention that once all records and invoices have been collected, the process of claiming back cross-border VAT requires the specific legal knowledge of over 30 countries around the globe.
Each country that offers a VAT rebate system has different regulations and deadlines, as well as the more common business obstacles, such as language barriers, to contend with. This can make VAT recovery a time-consuming and laborious process.
Highlighting this, a recent OECD study has shown that nearly 21% of businesses are actually unable to recover any of the foreign VAT they incur on business expenditure, largely citing the policies of foreign tax authorities and a minefield of complex procedures.
Additionally, with businesses spending around 7 hours per week on paperwork and administration tasks according to a 2017 survey of European businesses, it means more and more firms are looking to cut back on bureaucracy wherever possible.
However, the amount of money that companies could claim back in VAT means the issue can no longer be avoided. Our research found that over $20bn is currently owed to companies across the world in unclaimed VAT.
It is therefore more essential than ever that businesses are aware of the capital that is at stake and understand that it’s money that can make a considerable financial difference to a business, be it an SME or large corporation. With the uncertainties surrounding British business in the wake of Brexit negotiations, no company can forgo capital that is rightfully theirs.
It is vital then that there is a shift in attitude from CEOs and entrepreneurs towards reclaiming VAT paid overseas. Though it remains that resources are not always available from each company to collate the relevant receipts and expense forms from cross-border travel, there is substantial value in devoting time to collect this form of data, as the financial rewards have proven to be extensive.
At this point, it is worth noting that while the process may have been complex and burdensome in the past, advances in the sector now mean that VAT reclaim companies can effortlessly take care of this process for you.
With relevant expertise, VAT reclaim companies take care of the complex negotiations on your behalf and reclaim the VAT expenses that may otherwise have remained unclaimed. These third-party organisations are equipped to deal with the bureaucratic procedures and armed with specialist technologies that get the process done far more efficiently than a company could on their own.
The professionals available to negotiate VAT refunds have the legal and technical knowledge in the wide range of countries around the world, simplifying the process and ensuring that VAT is reclaimed in as little time as possible.
Such is the complex and time-consuming nature of these procedures, many of the bureaucratic processes are now performed by advanced technological programmes. VAT IT‘s VAT Cloud for example, automatically connects your expense management system to the relevant tax portals, in accordance with EU Refund Directive VAT reclaim legislation.
Advancements like this in the sector are levelling the playing field when it comes to reclaiming. Not only do they mitigate the risk of human error, but they substantially speed up the process of reclaiming VAT while preserving a company’s resources.
Because the amount of capital that can be recovered in VAT is so vast, it is crucial for any business to not just understand but to now act upon.
Rather than let this money continue to be lost, it’s welcome that an increasing number of CEOs, financial directors and entrepreneurs are changing their attitude towards collecting VAT. With the right partner, the process can again be a valuable source of income for companies.