Tips for identifying potential VAT reclaim opportunities

You don’t need to be a part of the finance team to notice that running and growing a business is costly. So, when there’s an opportunity to reclaim a portion of your business costs incurred, there's no reason to leave money on the table. Except if you didn’t know it was yours to recover in the first place.

If your organisation is paying VAT for goods and services relevant to your business purpose (local or internationally), you are entitled to recover the costs. However, you need to know where to look to maximise your VAT recovery. So, here are our top tips for identifying VAT reclaim opportunities within your organisation. 

Understand which expenses are VAT reclaimable 

First and foremost, you need to clearly understand which value-added tax (VAT) expenses are reclaimable. Generally, businesses can reclaim VAT on costs incurred for goods or services supplied to your business or an employee of your company. Two overarching VAT reclaim categories include valuable reclaim opportunities that often go unnoticed; Foreign VAT and Domestic VAT. Here are five tips to better identify VAT reclaim opportunities within the foreign and domestic VAT scope.

The VAT recovery process isn't an isolated process within the finance department. By promoting greater visibility and transparency across teams, you can better pinpoint opportunities for VAT reclaim, which might have gone unnoticed earlier. For example, your marketing team may better understand costs incurred at tradeshows and conferences that are VAT reclaimable. Additionally, your HR team is more involved in employee travel and relocation costs, which can yield significant Travel and Entertainment VAT recovery. 

When it comes to identifying VAT reclaim opportunities, the success of recovery hinges on your ability to meet country-specific eligibility criteria. Depending on the country, eligibility criteria may include specific registration requirements, sales thresholds, and recordkeeping. A general rule of thumb for all recovery processes is to ensure that you accurately record and retain all VAT-recoverable invoices. But keeping receipts only gets you up until a certain point. Keep in mind that all invoices must be original and include the correct legal entity names. 

3. Understand the TOMS scheme

Many organisations use tour operators and agencies to organise and assist in planning domestic and foreign business travel. However, most tour operators and agencies work under the Tour Operators Margin Scheme (“TOMS”). Whilst TOMS means the costs are irrecoverable, the application of TOMS differs across jurisdictions. Be sure to check your invoices to see if there is an opportunity to recover. 

4. Stay up to date with the latest laws and legislation

Successful VAT recovery hinges on your organisation's ability to stay current with the varying rates, registration requirements, filing procedures and changing legislation. In addition, eligibility criteria are ever-changing, along with the prerequisites required to streamline the recovery process. Therefore, you must be tapped into the latest industry-related VAT news and regulatory changes to better identify reclaim opportunities.

Identify your VAT potential at the click of a button

Instead of missing significant VAT recovery opportunities, opt for a fully automated analysis and recovery solution. Access your business’s VAT potential analysis at the click of a button and increase your domestic and foreign VAT refund yield with industry-leading technology and automation. 

We’ve got you (re)covered.