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How much VAT can you claim from a business trip?

Significant expense is generated by employees during their business trips. Employees traveling abroad leave VAT revenue, which often remains unclaimed every year. A large amount of this VAT is lost due to submission of incorrect or incomplete invoices. The company may opt to pay the employee but still will not be able to reclaim the paid VAT leading to large amounts of money lost year after year.

To recover these funds, it can be very easy just by following the simple rules and guidelines given to ensure they lawfully reclaim the VAT due to the company. In the past few years, a number of simple guidelines have been put forward by experts to assist employees to reclaim VAT once they have traveled for business abroad. These guidelines ensure that proper invoices for all their expenses are submitted.

Basic general guidelines

1. Ensure that you bring back the original invoice only. An original invoice will have 'invoice' on it either in English or the native language. A copy is not acceptable without a VAT invoice hence it's important to claim the VAT invoice.

2. Ensure to check the legal entity name and official address are correct on all invoices. Any invoice showing just the name of a department without the official company name is not entitled to VAT refund. Employee's home address is not acceptable either; just ensure that the official company name is on the invoice. To also have an advantage, when checking out of the hotel room, make sure to give the receptionist your business card. This will ensure that the official company name and address is input on the invoice.

3. Specified recipient details and VAT amount do not necessarily have to be mentioned. In cases of smaller invoices say for expenses of taxis, restaurant and public transportation you can have VAT breakdown. Confirm that details like the invoice number and date are included, then check together with the VAT indication. It is worth mentioning that if the invoice is more than one page make sure that you submit all pages.

4. Some specific countries have special requirements whereby they require that all invoices have the company name. These include the smaller invoices from restaurant bills and public transportation. Ensure that the cashier includes it as you must show proof of payment. When in these countries ensure to keep your invoices and payment vouchers as well.

Following these guidelines makes it easier for your organisation to have control over tax and expenses accrued, ensuring utmost transparency. Hence it's more eligible to reclaim VAT refunds. To better on this, most companies have implemented VAT box.

VAT box is an automated, enterprise-wide, cloud-based recovery solution that streamlines the worldwide reclaiming process. VAT Box allows companies transparency on all paid taxes, conferences, hotels, restaurants, transport, car rental and fuel expenses.

Recovery of VAT

  • A company has a chance of reclaiming VAT if it does incur foreign VAT during purchases of services. With this ensure to change the place where tax is imposed for the invoicing of services.
  • All expenses linked to transport are bound to VAT in the country offering service. Companies should reclaim the tax from tax authorities of that country.
  • Economic costs expenses should not be neglected as they represent a significant factor in the economy. VAT rates continue to increase at a high rate hence optimal budget of this should be considered
  • Awareness of the VAT recovery procedure which is usually either electronically or manually. An application form fully completed together with any additional documents directly to the tax authorities of the refund country. In which both procedures should have detailed listing of invoices and tax receipts.
  • In the case where the foreign administration refuses the claim, it will be very beneficial to get an expense claim management system. This will give a full and clear transparency of all expense notes for reclaim. In cases where they claim inaccurate charges the supplier should be contacted.
  • The timescale put for processing is four to six months. However, some countries may take longer up to eight months in which case if they take longer than that there is a regulatory mandate for them to pay extra.
  • VAT recovery is integrated into the company's accounts according to the company's rules and is broken down according to the type of expense.
  • Also, companies experiencing difficulties can receive support from VAT specialists.
  • Finally, a utilize expense claim management system can be very advantageous. This is to help the company complete transparency of employees expense notes even as know how much VAT they can reclaim from their business trips.
  • Holiday Extras Travel Insurance is sold and administered by Holiday Extras Cover Limited, registered office address: Ashford Road, Newingreen, Hythe, Kent CT21 4JF.

    Holiday Extras Cover Limited is an insurance intermediary authorised and regulated by the Financial Conduct Authority, registration number 828848. You can check this by visiting the Financial Services Register

    Holiday Extras™ is a Trading Name of Holiday Extras Cover Limited. The insurance is underwritten by Great Lakes Insurance UK Limited. Great Lakes Insurance UK Limited is a company incorporated in England and Wales with company number 13436330 and whose registered office address is 10 Fenchurch Avenue, London, United Kingdom, EC3M 5BN.

    Great Lakes Insurance UK Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Firm Reference Number 955859. You can check this by visiting the Financial Services Register