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VAT PULSE

A blog about local and foreign VAT matters, best practices, and tips from practioners.

Our client, a renowned name in the automotive industry engaged in cross-border trade for decades with partial operations set up in India, has been conducting trade and business activities in various geographies in the world. Partnered with a VAT recovery vendor, they already had a functioning system of VAT recovery being practiced over the years. The question we uncovered, however, was whether or not it was a partial recovery that they were claiming. Our estimate was that there was an INR 100,00,000 (€1,27,937) of VAT savings potential was being missed out every year!

The Challenge

Opportunities missed on account of a lack of expertise.

A giant themselves, our client was no stranger to intelligent and efficient capital management. One of their many financial management practices already in place was the recovery of VAT on business travel and activities to different locations. Their then VAT recovery vendor was already enabling regular claims for them in some geographies for certain activities. Our discovery was that while there were no inaccuracies on this front, there was certainly potential for more recovery that the vendor was missing out because of a lack of expertise with the rules and regulations and no local presence in specific countries.

Problem Identified

Diving in with our established VAT recovery audit procedure built on 25 years of experience in VAT recovery business, we uncovered the following challenges our client was facing with their VAT recovery returns:

  • Vendor’s lack of expertise about rules and regulations
  • Vendor’s lack of local presence in different countries

While our client was already aware of the VAT recovery procedure and had in place a ‘VAT/Tax control framework’ that prevents errors during computation, their VAT recovery vendors were unable to leverage this framework to identify opportunities and avenues to maximize claims.

Solution Proposed

Collating the reports from the VAT recovery audit conducted, our team of experts presented our client with;

  • Total VAT recovered by the current vendor on different activities by different geographies.
  • Additional business activities for which VAT can be reclaimed in different parts of Europe.
  • Estimated additional VAT returns in next five years, combined with current and additional VAT reclaim opportunities.

Leveraging the expertise of our Foreign VAT experts, we closed our initial assessment report with multiple avenues that were currently not being optimized to maximize our client’s VAT returns. Historical data indicated that our client could have claimed up to INR 100,00,000 (€1,27,937) additionally on refunds every year which was being missed out on and the losses summed up to a total of INR 700,00,000 (€8,95,560) entirely.  Our recommendations included the next immediate steps that were needed to make their claims for these returns to ensure they did not miss out on the window of opportunity that year also.

Outcome

VAT returns maximized by 50% by identifying opportunities that even the big 4 have missed!

Are you sure that your business is taking advantage of every available opportunity when it comes to VAT recovery? Find out today with a free assessment. All you need to do is fill in the form!

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