VAT Explained Part 3 - International VAT
(This might not be relevant to many businesses BUT if you have purchased or spent overseas for your business, you might have money waiting to be claimed – read on)
Did you know that VAT is recoverable in more than 40 countries around the world?
For companies who have employees that travel to any of those countries, there is a percentage of tax in many expense types that can be reclaimed when business travellers return to their home country.
However, billions of pounds in international VAT are unclaimed by companies each year.
Why companies don’t reclaim international VAT
1. They don’t know they can
Although the countries that allow VAT reclaim have well-established protocols in place, you won’t be surprised to know that they’re not always widely advertised. This, coupled with the fact that most companies have no idea about how much they can potentially reclaim, means VAT stays as a hidden cost.
2. Complex and diverse VAT legislation
Each country has the right to set its own rules and determine the process by which VAT can be reclaimed. But because the individual rules are different for each country, the process can be quite tricky. On top of this, many submission portals are inefficient and overly-complex, and the end result for most companies that try this method is a high rate of rejected claims.
3. Lack of time and VAT expertise
Because each country has different rules and processes in place, it is virtually impossible to find one person in your business that has all the knowledge required for complete and accurate VAT reclaim. In addition, language variations, changes in time zones and currency issues add further complexity. For these reasons, most companies assume that there is probably not much money to reclaim, and it would cost them too much to employ the team required to reclaim the VAT.
4. So what can companies do?
There are many experienced companies with the resources and expertise needed to help you recoup VAT and inject cash back into the business – often at no cost to you, as their fees are simply a percentage of the cash claimed back on your behalf.