VAT Recovery in media and entertainment

Explore the reclaim opportunities available within the industry

Like in any other industry, businesses in the media and entertainment sector can recover their VAT on their high-cost expenses. Have you got your local return processes covered? Great! But how much time is it draining out of your monthly capacity? Moreso, how much are you recovering? If it’s limited to a few common local supplier invoices, buckle in - your VAT landscape is about to get a whole lot bigger. 

The VAT reclaim scope covers a plethora of high-cost local and international business expenses; one only needs the right roadmap and a trusted sidekick, of course. But businesses in the media and entertainment sector are no strangers to the power of a compelling hook to sell a story. Which begs the question, if the VAT reclaim potential is so significant, why are millions of euros still going unclaimed each year? 

Unfortunately, despite best intentions, VAT often remains unrecovered due to common internal and external challenges that plague the process. Navigating these challenges is often time-consuming and resource-intensive, leaving organizations settling for sub-par returns (if any). 

The challenges exist, but luckily, so do we. 

So, how can companies reclaim VAT savings of up to 27% of cross-border and local business expenses in areas like travel, entertainment, and supplier payments? What is the right place to start? Scouting for potential, of course. 

Domestic and foreign VAT recovery: What’s the difference? 

There are two overarching types of VAT processes. In a nutshell, each process is determined by where the expense took place (locally or internationally). The type of VAT process that applies to the specific expense will then determine all compliance requirements, invoicing instructions, deadlines, reporting obligations, and claim submissions. Here’s a brief look into both. 

The VAT reclaim opportunity within media and entertainment

Within the VAT reclaim landscape, two pressing matters plague all businesses; administering VAT reclaims and maximizing VAT reclaims. Both these challenges contain a myriad of sub-struggles that all look very different depending on the country you’re reclaiming from, the recovery type (local or international) and your specific industry. So, to help you smooth over the rough edges and reclaim up to 27% of the VAT incurred on all eligible expenses, we’re looking at the most common blindspots, missed opportunities and best practices for media and entertainment in domestic and foreign VAT recovery. 

Domestic VAT Recovery in the Media and Entertainment Industry

Local input VAT returns are part and parcel of running a business. If you’re VAT-registered, this isn’t a new concept or something businesses necessarily struggle with. However, how much time, effort and resources are going into submitting your input VAT returns, and ultimately - are you reclaiming the maximum amount and compliant with local regulations? 

As a business scales, it may be VAT-registered in multiple countries. From an administrative point of view, managing multiple VAT registrations that all differ depending on local jurisdiction becomes increasingly challenging. The result? Underutilizing the VAT reclaim opportunity while simultaneously risking non-compliance and potential penalties. 

Are you overclaiming input VAT? 

As businesses in the media and entertainment sector generally incur input VAT from multiple countries, the list of eligible expenses per local VAT return starts to get more complex. Often, due to claiming input VAT on non-deductible expenses, businesses may overclaim. In the event that a business over claims, not only do their reclaims get rejected, but they run the risk of becoming non-compliant, which eventually results in more frequent tax audits and possible penalties. 

Are you under claiming input VAT?

Due to insufficient data or unidentified hidden VAT opportunities, companies often run the risk of underclaiming input VAT incurred. Without the right tool, these VAT opportunities are often challenging to track down, ultimately keeping businesses from maximizing the input VAT refunds available for recovery. 

How to move your savings from potential to pocket

Although the domestic VAT recovery scope holds significant financial value for a business, the process often asks too much from finance teams already stretched by their day-to-day responsibilities. If done manually, finance teams are pressured to not only find all eligible transactions but also to assess and review high-volume invoices for eligibility and compliance. The result? Millions of recoverable costs slip through the cracks, paired with a team functioning over capacity with little to no yield to show for it and definite risk exposure. 

Our Domestic VAT recovery solution bridges the gap between recovery potential, pitfalls and your pocket with a system specifically designed to deal with their high volumes to ensure accurate, streamlined, and guaranteed domestic VAT recovery on local business spend. Our VAT IT technology extracts the required expense data, hunts down invoices and documentation that may not be in your T & E files, and ensures you achieve 100% compliance (and stay there). Whether you need help with managing registrations, invoice compliance, error-proofing claims or maximizing your yield, the VAT IT team has you (re)covered. 

Maximize your reclaim potential on local T & E expenses such as venue and equipment rental, transport, accommodation and much more while managing your VAT obligations and staying compliant - all on auto-pilot. 

Foreign VAT Recovery in the Media and Entertainment Industry

Businesses within the media and entertainment industry have significant international expenses. This can include anything from work-related international travel to foreign supplier spend or global marketing and media campaigns. 

But how does telling you how much you’re spending help you make money? Well, that’s where the importance of foreign VAT recovery comes into play. 

Foreign VAT recovery is reclaiming the VAT portion of international business spend without needing to be VAT-registered within the country. However, to successfully recover these costs, businesses must comply with the VAT rules, regulations, and processes set in place by Foreign Tax Authorities across the globe.

What can you reclaim? Here’s a quick look: 

Common Foreign Expenses That Are VAT Recoverable

Meetings, events, conferences, conventions & trade shows

One common international expense across the media and entertainment industry includes the costs of attending trade shows, meetings, events, and conferences. Often, these costs are written off as a necessary expense to aid business growth, networking, and marketing. However, a significant portion of these costs incurred is, in fact, VAT recoverable, adding significant savings to your annual MICE spend. Recoverable costs include VAT on event registration, attendance fees, transport costs, accommodation, and sponsorship fees.

Travel and Entertainment expenses

VAT on T & E forms a significant portion of the VAT reclaim scope and includes almost all costs incurred during business travel, including accommodation, restaurants, transportation, and entertaining clients. However, most of the recoverable expenses are often difficult to find if not invoiced and tracked correctly. The process also heavily depends on country-specific regulations and reporting requirements. 

Entertainment expenses, for example, include any expenses towards business travel or client entertainment, like 

• Business-related meals and entertainment at social and sports events, restaurant meals, and theatre tickets
• Restaurants/food
• Taxi fares and other transport services

Additional high-value VAT recoverable costs

Each industry has its own unique VAT recovery scope. The foreign reclaim landscape is also prone to change, with legislation and directives constantly evolving to highlight new opportunities for VAT recovery within specific industries and countries. That’s why your reclaim process must constantly align with the latest developments concerning global VAT treatment for businesses within the media and entertainment sector. However, despite the changing landscape, common recoverable expenses include the following: 

• Equipment purchase, rental, and maintenance
• Import VAT
• Marketing costs
• Installation of displays
• Hotels & Accommodation
• Foreign supplier invoices
• Restaurants/food
• Taxi fares and other transport services

How to Get Started With Foreign VAT Refunds as a Media and Entertainment Company

It's no secret that VAT recovery tends to be challenging. However, your internal organizational structure shouldn't add to those challenges. Although there is no standardized foreign VAT recovery process, there are a few core fundamentals to keep in mind to aid the recovery process and maximize your VAT reclaim potential. 

1. Consider your internal structure

VAT recovery deeply hinges on an organization's spend visibility. All expenses and transactions must be visible from an inter-departmental and leadership level to ensure maximum returns. Recoverable expenses can hide in the most unassuming places, ranging from HR to marketing to sales. However, many projects, such as meetings, events, conferences, etc., do not exist from a financial point of view. Therefore, organizations must implement processes that guarantee all invoices are reported into the accounting system.

2. Invoicing instructions

Not only do organizations need to report and obtain all invoices, but these invoices must comply with the country-specific invoicing and reporting instructions for eligible VAT returns. Some common invoicing instructions that aid the process include: 

• Ensuring that the correct VAT rate has been applied
• Invoices must be made out to your business, and not a third party, for VAT to be reclaimed 
• Obtain all valid original invoices as per country regulations
• All invoices must contain supplier information (name, address, VAT registration number, etc.)
• Comply with the country-specific VAT treatment, deadlines, reporting requirements, and legislation 

3. Working with the right agents

Many organizations rely on third-party travel and event suppliers to organize meetings, incentives, and business trips on their behalf. Although convenient, this often poses a significant challenge regarding VAT recovery. Why? If your agents work under the Tour Operators' Margin Scheme (TOMS), input VAT is irrecoverable. This is because all costs are made out as indirect expenses, which disables your right to reclaim it. It's therefore critical that companies work with the suitable agents who understand the need to work as a disclosed agent, which entitles you to recover VAT. 

Alternatively, get started on the right track without the heavy lifting. 

How can your business leverage VAT IT to elevate your finance?

Reclaiming your VAT shouldn’t come at the expense of critical resources, your time or patience. Fortunately, we do VAT, so you don’t have to. We replace the administrative nightmare of complex VAT treatment with one centralized solution for all your VAT recovery needs - which ultimately boils down to one core goal: effortless, compliant, and maximized VAT reclaim and compliance. 

The VAT IT team acts as an extension of your finance team, providing tech when it counts and human when it matters. Our automated VAT recovery tool is the perfect combination of human expertise and digital accuracy. From unparalleled account management and spend visibility to country-specific experts that align your recovery process with the country-specific requirements and legislation. 

Start your journey toward maximized VAT recovery with a team that understands the importance of identifying all areas for potential VAT recovery. 

Recover your VAT without having to compromise your time, people or patience.