VAT Reclaim | VAT Recovery | Travel and Entertainment
3 mins | April 18, 2023

Tips for Maximizing VAT Reclaim for Travel and Entertainment Spend

Nothing dampens the mood quite as quickly as worrying about finances when it comes to business travel and entertainment. It’s a pain in the pocket and swiftly stunts business growth and opportunities. Although VAT recovery processes are known for...

Tips for Maximizing VAT Reclaim for Travel and Entertainment Spend

Nothing dampens the mood quite as quickly as worrying about finances when it comes to business travel and entertainment. It’s a pain in the pocket and swiftly stunts business growth and opportunities. Although VAT recovery processes are known for being complex, burdensome and challenging to manage - in a competitive marketplace, businesses can no longer afford to sit back and watch significant savings and reclaim opportunities pass them by (even if they're unaware of doing so). 

So, what's the solution when processes become increasingly complex and budgets significantly tighter to manage? This blog post explores VAT reclaim on business travel and entertainment costs and how to find and manage successful recovery opportunities. 

What classifies as Travel and Entertainment (T & E)? 

The first step towards maximizing your VAT reclaim is knowing what is claimable. Although specific rules and regulations differ depending on the country you're traveling to, most companies can recover VAT on travel and entertainment costs if they:

  • Have employees who travel for work purposes.
  • Have numerous branch locations across the globe.
  • Frequently attend or exhibit at trade shows, conferences or exhibitions.
  • Fall within the pharmaceutical, automotive or manufacturing industry.
  • Offer cloud-based solutions and require servers housed in multiple jurisdictions.

The challenges of reclaiming international VAT 

Even with a wide range of claimable VAT opportunities, many organizations fail to reclaim the costs incurred successfully. So, what's standing in the way of successful VAT recovery if the savings are rightfully yours to reclaim?

Generally, the most common challenges when reclaiming international VAT boil down to the following: 

  • Country-specific deadlines and rules, along with different administrative practices for filing. 
  • A lack of expertise in foreign legislation, language support and relationships with local tax authorities. 
  • A need for knowledge and resources regarding identifying VAT reclaim opportunities. 
  • Incorrect or incomplete claims.
  • Missing critical VAT reclaim windows as recovery is subject to time limitations. 

How to maximize your VAT Reclaim for Travel and Entertainment Spend 

Too often, businesses take one look at the challenges associated with VAT reclaim and consider it part and parcel of doing business. In the meantime, however, their competitors can successfully reclaim up to 25% of overseas business travel and entertainment spend, maximize the savings, and inject critical liquidity into their business. So, what separates successful reclaims from the unrecovered? Here's what you need to know. 

Work with the right agents

Many organizations rely on travel agents to manage their travel and entertainment incentives, and rightfully so - it saves time, admin and resources in terms of planning. However, regarding VAT recovery, using event suppliers causes a significant roadblock. This is because most travel agencies work under the Tour Operators' Margin Scheme (TOMS). So how is this relevant to your business? Well, where the TOMS applies, organizations cannot recover input VAT. This is because most costs incurred reflecting as indirect costs, which have a critical effect on the VAT return process. Instead, it's considered best practice to work with a disclosed agent. 

Understand each country's requirements

Ultimately, if you manage the recovery process in-house, the success of the recovery process hinges on your ability to understand each country's requirements regarding the VAT reclaim process. This includes separate timelines, filing requirements, registration procedures, invoicing instructions, and recordkeeping processes. In addition, even if all invoices are successfully retained, the reviewing process requires expert knowledge of the VAT rules of destination countries and the requirements for an eligible invoice. To simplify the process, a general rule of thumb to stick with is to ensure that you retain all invoices and receipts, that VAT is a separate line item, and that all charges are made to the end user. 

Automate your VAT recovery 

Even the most fool-proof manual VAT recovery processes are rife with risk of human-error. Especially when one small error can lead to losing out on up to 25% of your costs incurred. Rather, eliminate human error and increase your VAT return yield in one fell swoop with automated VAT recovery solutions. Automated recovery solutions help you align your VAT reclaims with industry best-practices, your finance departments, your employees and country-specific VAT treatment on auto-pilot, whilst tapping into experts in the field regarding local and international VAT laws and regulations. 

Keep experts in your corner with VAT IT

Fortunately, your business doesn't have to settle for the common challenges that frequently lead to unrecovered VAT. Instead, claim up to 25% of your overseas business travel and entertainment spend in your VAT refund claim with a team of experts to guide you through every step. 

Leverage the combined power of our industry leading technology, efficient processes, and our specialist team with over 20 years’ experience. We've got you (re)covered.


VAT refund Tool kit

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Evaluate your VAT reclaim potential based on your annual Travel & Entertainment expenditure.
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Navigate the intricacies of your invoices. Use our interactive tool to find out what is required to optimise your claims.
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