How to reclaim VAT in construction and build up your savings

In a competitive market, especially within the construction industry, businesses must pay attention to a significant additional revenue source. What's this income stream we're referring to? Value-added tax, of course. 

Now, if VAT feels more burden than bank, listen up!

For many construction businesses, VAT accounts for 30 - 40% of all cash flowing through the company. Still, due to the connotations of the VAT reclaim process being complicated, time-consuming and risky, it's often overlooked or undervalued. 

We're here to change that. Here's how to reclaim VAT in construction so you can build up your savings without draining your critical resources. 

Step one: Don't settle for good enough

Most businesses already have a process for recovering VAT on domestic business expenses. However, this merely scratches the surface regarding business expenses that your organization can rightfully reclaim. Therefore, the first step is to realize that your business (regardless of size) can maximize its VAT potential without compromising your time, people, money, or compliance. 

Many companies in construction (including your competitors) don't maximize their VAT potential due to the administrative burden tied to the process and the complexity of the industry's global supply chain and ever-changing VAT legislation. However, with the right partner, you can bypass these challenges, and manage your multi-national, cross-border tax strategy. But it starts with knowing where to look.

Step two: Know where to look

Eligible expenses can be hidden in the most unusual places. These opportunities become more prevalent as your business taps into more VAT recovery resources and support. For example, did you know that VAT on event registration, attendance fees, transport costs, and accommodation expenses can be recovered? However, these expenses are only visible from an HR or marketing perspective. Therefore, we recommend excellent spending visibility across departments to mitigate the chances of eligible expenses slipping through the cracks. In addition, creating awareness and educating your employees on their individual roles regarding VAT recovery is quintessential in ensuring successful VAT recovery processes. 

Step three: Consider where the expense took place

VAT recovery can be categorized into two main types: domestic and foreign. The kind of recovery process greatly depends on where the specific expense occurred. Once you can segment domestic from foreign reclaim opportunities, you can optimize and maximize your VAT potential. 

Within the foreign VAT reclaim scope, VAT procedures are designed explicitly for non-resident companies seeking to recoup VAT incurred on expenses beyond their registered VAT jurisdiction. This approach enables businesses to qualify for VAT recovery on international invoices or expenditures without necessitating registration within the respective country. Did someone say additional savings? Absolutely! 

Great, now that you have a high-level overview of what VAT recovery in construction could look like, what’s next? Well, if you’d like to deep-dive into the nitty-gritty of VAT recovery in construction, head over to our VAT in construction go-to guide.

Alternatively, fast track to effortless and efficient VAT reclaim right away with VAT IT. Don’t let small errors or missed opportunities keep you from maximizing your recovery potential. Identify, claim and recover your VAT incurred and inject cash back into your business.

We’ve got you (re)covered.