5 mins | August 1, 2023

VAT Recovery within telecoms industry

Explore the reclaim opportunities available within the industry

The telecommunications industry has revolutionized global interconnectivity and provides a vital thread between communities. With the telecoms industry thriving and growing rapidly,...

VAT Recovery within telecoms industry

Explore the reclaim opportunities available within the industry


The telecommunications industry has revolutionized global interconnectivity and provides a vital thread between communities. With the telecoms industry thriving and growing rapidly, businesses within the telecom sector are no strangers to the importance of near-instantaneous processes. However, when you take a look behind the scenes; many big and small telecom companies are still plagued by drawn-out, resource-intensive, and time-consuming VAT reclamation processes, causing millions in unclaimed VAT to slip through the cracks. 

What’s the deal? 

Due to the industry’s complex global supply chains and ever-changing VAT legislation, identifying eligible expenses, ensuring compliance, and executing successful VAT recovery can be challenging.

So how can you manage your multi-national, cross-border tax strategy and ensure that you save VAT, improve operations and optimize your supply chain? 

The first step is understanding the VAT implications on your business and how recovering hidden VAT within your organization can drastically elevate your business finance. 

Domestic vs. Foreign VAT recovery

Although there is no standardized VAT recovery process, the reclaim process can be categorized into two overarching types; domestic VAT and foreign VAT reclaim. All processes, expenses, recovery, and criteria are determined by the place the expense took place. Therefore, it’s imperative that you understand the intricacies of each type of VAT recovery.

Domestic VAT

Foreign VAT

Domestic VAT, or local VAT, refers to the value-added tax added to local business expenses within the countries where your business is VAT-registered. As a business scales, this often includes managing and administering VAT processes in multiple countries. 

Foreign VAT entails VAT charged on international business expenses. It allows overseas business claimants to potentially reclaim VAT incurred on expenses within a foreign country without being required to register for VAT within the country they're reclaiming from. 


Who can reclaim VAT in the telecoms industry?

Typically, any business that incurs local and international VAT on business expenses can rightfully reclaim the VAT portion on those costs - granted that the expenses are eligible for VAT reclaim and that you’re compliant with the industry and country-specific VAT reclamation process, rules, and regulations. 

Within the telecommunication industry, a few common examples of businesses with significant reclaim potential include the following: 


Telecommunications Service Providers

Telecommunications Equipment Manufacturers

Telecommunications Infrastructure Providers

Telecommunications service providers often incur VAT on expenses related to infrastructure, network equipment and software. The VAT portion on both local and international business expenses may be eligible for VAT recovery. 

Manufacturers incur VAT during each stage of the production process. Common costs that incur VAT (locally and internationally) can include VAT paid on raw materials, equipment and components. 

These companies have colossal spend towards telecommunications networks, including cables, fiber-optic lines and related construction materials. The VAT portion on these expenses are often eligible for significant recovery. 


The benefits of VAT reclamation in the telecommunications industry

Now, although the process may seem daunting, the challenges do not warrant leaving unreclaimed expenses on the table - especially if you can bypass those challenges with an end-to-end VAT reclaim solution. Here’s why: 


Reduce costs and improve cash flow

VAT incurred on local and international business expenses can drastically dent your bottom line, especially regarding high-value purchases, investments, and international operations. Often, businesses settle for time-consuming and sub-standard processes that result in minimal returns months after the original purchase. However, by optimizing the reclamation process and investing in expert guidance and automated solutions, businesses can streamline recovery, enabling them to reduce overall costs and inject cash flow back into their business to elevate finances toward additional operations.


Gain a competitive advantage

Optimizing resources and expenses is critical in a fast-growing and competitive market, especially when trying to establish a foothold in the global market. By reclaiming the VAT portion on most of their business expenses, businesses can offer products and services at a more competitive price. Moreso, by utilizing a tool that can streamline VAT recovery and maximize the reclaim potential, businesses can benefit from additional income while freeing up critical resources and time in one fell swoop, enabling them to invest more money and time into additional business growth opportunities. 

Greater financial transparency and visibility:

Businesses can improve their strategic business planning and budgeting by successfully tracking and assessing eligible transactions and receiving maximized VAT returns. VAT reclaim enables telco companies to better account for their expenses and creates opportunities for more intentional and accurate financial forecasting, ultimately improving overall profitability. 

So, with many benefits and even a larger scope of reclaimable expenses, the first step is to identify your specific opportunities for VAT recovery in your expense management system. Here’s a breakdown of the essentials to identifying VAT recovery opportunities. 

Domestic VAT reclaim for Telecoms

What is domestic VAT? 

Most businesses within the Telecoms industry have already fine-tuned their local input VAT processes. However, as businesses scale and multiple countries get added to the administrative process, it’s easy to lose out on significant savings opportunities while simultaneously exposing your business to some risky areas of non-compliance. However, it should be noted that administering multiple claims and compliance requirements from multiple countries is no small feat, often stealing focus from maximizing the opportunities available simply because businesses are struggling to keep up. 

As each country is subject to its own local VAT rules, regulations, deadlines and rates, most businesses fail to reach their full potential regarding their reclaim yield, often either overclaiming or underclaiming their input VAT. 

Overclaiming VAT

Pinpointing the eligible expenses is particularly important when working across multiple VAT jurisdictions. Depending on the country you’re claiming from, rates may differ as well as eligibility requirements. To add fuel to the fire, changing regulations may also impact what constitutes refundable expenses and which do not. Due to this, many companies run the risk of overclaiming input VAT and including non-deductible expenses in their VAT claims. Not only does this lead to rejected claims, but it can also raise caution with local tax authorities and lead to potential fines and audits. 

Underclaiming VAT
On the other side of the spectrum, companies with multiple VAT registrations also run the risk of under claiming input VAT. This is often due to a lack of time, resources, data or expertise within the specific country’s reclaim scope within the telecoms industry. 


Connect the dots with our domestic VAT solution 

The domestic reclaim process can hold significant financial value. However, many businesses still rely on traditional manual VAT recovery processes that require teams to comb through a couple (of thousand) invoices to assess eligibility and compliance. Due to the high-volume nature of reclaiming VAT on local business transactions, this process frequently incapacitates critical team members, stealing focus from other core business objectives. 

Instead, say hello to streamlined, efficient, and maximized savings with VAT IT in your corner. Our domestic VAT solution combines digital accuracy, state-of-the-art tech, and human expertise to deliver a centralized all-in-one reclamation tool. It is specifically designed to deal with high-volume invoices and expense management systems to ensure accurate, optimized, and maximized VAT recovery on local business spend. In addition, if we spot an inaccurate invoice, we’ll flag it and request a new one via our reissues department to ensure a faultless return report. 


Claiming Foreign VAT in the telecommunications industry

What is foreign VAT? 

Foreign VAT, or international VAT, is a VAT incurred on all international business expenses in a country where you are not VAT-registered. However, the VAT treatment within the foreign reclaim scope hinges on country-specific rates, eligible expenses, deadlines, and treatments. So, which international expenses qualify for reclaim in telecoms? Here’s a look. 


Foreign VAT reclaim opportunities

Foreign VAT exposure often results from VAT incurred from: 

Testing of components for safety, efficacy and conformance testing

Compliance with legal regulations as well as industry and safety standards can be a taxing challenge to any business. With such a wide array of clients and outstanding relationships with tax offices worldwide, coupled with our industry-leading knowledge, VAT reclaim has never been easier. Allowing us to handle your foreign VAT returns ensures a fast, simple, and compliant vat reclaim experience that will maximize your returns, allowing you to focus on what matters.

Meetings, events, conferences, conventions & trade shows

Conferences, events, meetings, and tradeshows in the telecoms industry generate huge expenditure and are eligible for VAT for recovery. VAT on event registration, attendance fees, transport costs, accommodation expenses and sponsorship fees are just some of the expense categories that can be eligible for up to a 27% reclaim opportunity.


Reclaim additional high-value expenses

  • Supply and install costs
  • Delivery of components or replacement parts
  • Import VAT
  • Research and development costs
  • Maintenance costs
  • Engineering, recruitment, training and other consulting services


How can VAT IT elevate your business finance? 

VAT recovery is easy if it’s what you’re designed to do. We service two of the largest Telecommunications Operators in the world, enabling them to recover the VAT portion on their high-value expenses without compromising their resources or compliance. We do VAT (exceptionally), so you don’t have to. 

In fact, we service over 60 telecom industry clients and have recovered up to €1.5 million in foreign VAT over the past five years. How much of that comes out of your pocket? Don’t leave your money in the lost and found pile. 

With such an extensive network of clients, we have developed a world-leading understanding of the intricacies of VAT reclaim within the telecoms industry. We have successfully assisted our clients with reclaiming expenses ranging from Research and development costs, manufacturing costs, travel and entertainment expenses, testing of components, supply and installation, and many more.


Connect effortless VAT reclaim and maximized savings with VAT IT.

VAT refund Tool kit

process-icon Claimable countries & VAT rates
Discover which countries your business can reclaim from with our country guides.
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Evaluate your VAT reclaim potential based on your annual Travel & Entertainment expenditure.
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process-icon Invoice compliance checklist
Navigate the intricacies of your invoices. Use our interactive tool to find out what is required to optimise your claims.
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