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VAT PULSE

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

Travel Managers have myriad responsibilities, from managing their company’s strategic approach to travel, negotiating with vendors, day-to-day operations of the corporate travel program, traveler’s safety and security, credit card management, expenses (T&E) data management and providing all the relevant invoices to the accounts team. But that’s not all – there is more a travel manager can do!

Do you know that every time you book an air ticket or accommodation or any travel related activity for your employees/clients, a certain amount of value added tax or VAT (as it is commonly used) is charged? You may think that it’s a common practice where government charge VAT on almost all the activities. Well, that’s true. However, thanks to the tax treaty between the India and European countries that provide an option for you reclaim the VAT you paid on certain business travel and related activities. Sounds interesting?  Then read on….

Steps to get started

Although it is a fairly well-documented process, many companies have failed to claim large sums of money as they don’t have knowledge of this system or don’t have the in-house expertise to process the documentation. This begs the question – what should I do to ensure that VAT paid is recovered? It’s quite simple:

  • Collect all related bills and invoices (original)
  • Add all other required supporting documents (Note: if required you may need to get these documents translated into the language of the country where you are applying for the refund.
  • Provide all the above to an Indirect Tax specialist in your company or agency whom you have hired.

Hire CB VAT specialists if you don’t have the expertise to claim the foreign VAT

Statistics have shown that every year more than 15 billion of euros are left unclaimed. Make sure you’re not one of them!

Given below are a few important points and procedures that travel managers are required to know about T&E VAT reclaims.

Eligible Travel Expenses for Reclaiming VAT

With globalization and the setting up of global companies all over the world, travel has become an integral part of conducting business. However, VAT is not recoverable against all expenses, but only against expenses incurred in the course of business. It is, therefore, important to know which expenses are eligible for reclaiming VAT.

Given below is a list of expenses for which you can claim a VAT refund:

  • Airlines tickets when traveling for business
  • Hotel accommodation
  • Car rentals/Public Transport
  • Restaurant Bills
  • Business entertaining, providing that it is related to business

In addition, VAT can also be claimed on expenses carried out when attending seminars, professional training, conventions and events. To know more about these expenses read our detailed article VAT refund eligible expenses for business travel to Europe.

The Amount of VAT Refund Applicable in Different European Countries

In addition to being aware of the expenses for which VAT refund can be claimed, travel managers should also be aware of each expense the % of VAT refund applicable in different countries.  Some expenses have a 100% refund, while some have a refund with restrictions while others have a zero refund policy. For complete information about different VAT rates, categories and expenses eligible for VAT refund in different countries, download our VAT Refund Rate Chart.

Eligibility Criteria for VAT Recovery

The primary criteria for successful VAT refunds is to first ensure your company is VAT registered and is eligible for VAT recovery. The steps to follow for the eligibility criteria are given below:

  • The business being charged cannot be VAT-registered in that country
  • You cannot have a place of business or a residence in the country
  • You cannot manufacture any supplies in the country (with some exceptions)
  • You’ve paid €400 in VAT over 3 – 12 months, for business travel expenses (this is a general amount. The minimum amount that can be reclaimed varies from country to country)

VAT Reclaim Process

Although the VAT reclaim process can sometimes be tedious, you can breathe easy.  As a travel manager you are not required to carry out this process yourself, however, it is good to be aware of it. Every country has its own tax rules and regulations, and the documentation required to file a claim. You should hand over this part of the process to your tax department.

What happens if you don’t have a tax department?  There’s nothing to worry! We have created a readymade VAT Recovery Guide for your ready reference. Even if you don’t have a team to do any of the above, once again you can rest easy.  All you need to do is contact VAT recovery companies like CB VAT who will carry out the VAT recovery for you.  What’s more – you pay them only when the VAT amount is recovered.  Just fill out the assessment form and let us take care of all the complicated process, documentation and other related requirements. You just sit back and relax.  It’s that simple!

Determined to do it yourself?

Excellent! Using an online travel management tool will make the process of refund much easier.  When using one of these tools, expense receipts are scanned and stored in the system. By giving access to these expenses, the travel management system is able to extract this information and provide it to tax experts, who in turn can claim VAT refund from various tax authorities.

If you decide to use our services, we have developed the T&E-VAT Retriever, a tool which will help to simplify the process and reduce the effort required for VAT recovery.  All you need to do is ensure that all your receipts and invoices are electronically stored in the management system.

Now that you are aware of all the information a travel manager should be armed with, claiming VAT refund for your company will be a less daunting task.  Below are a few resources that might be handy for you.

Resources:
1. Ebook: The Ultimate Guide to VAT Recovery for European Business Travel
2. VAT Expense and Rate Chart for Europe
3. Foreign VAT Refund Calculator

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