We live in a world where traveling to various countries, whether for business or pleasure, has become a way of life rather than a luxury. On the flip side, however, is the fact that you pay a large sum of money in a foreign VAT or similar sales tax on different business-related activities.
If a company has to bear foreign VAT on travel and expenses incurred by its employees during business visits abroad, it has an opportunity to recover this tax by applying for a VAT refund. Businesses and companies that are familiar with and active in pursuing VAT refunds are a step ahead of the curve.
Although the process can be quite complex and tedious and this often acts as a deterrent to claiming the refund. For instance, since January 2010, recovery of VAT refund on purchases made in the European Union (EU) are being processed electronically, thereby saving time and effort. However, there are still some countries where the paper process is still prevalent.
Obtaining refunds from such countries is sometimes a long-drawn-out process. There is a large spectrum of goods and services on which VAT refunds can be claimed. The list differs slightly from country to country, however, there are a few opportunities which if taken advantage of, will put you amongst those who add to their businesses’ and companies’ profitability.
Given below are opportunities that will help you maximize your claim for refund of VAT:
Claim All Claimable VAT No Matter How Small the Amount:
Agencies that help you reclaim your VAT will often reclaim VAT from countries where the total VAT incurred is a larger amount. For instance, if an employee travels to France, Germany, and Denmark and incurs the most VAT in France, the agency will most likely only reclaim VAT from the French government. However, being through with your claims no matter how small or large they are, can have a serious effect on your bottom line in the long run. At CB VAT we leave no claimable VAT unrecovered!
Ensure Your Invoices Are Compliant
Every country has its own guidelines and processes to be followed regarding invoices sent claiming the refund. To ensure that your claim is accepted, check to make sure every invoice is compliant to that particular country’s standards. It is important that each invoice must list the VAT amount applied to the transaction. If necessary, have the foreign supplier correct it. For example, if a hotel invoice has been issued in your name instead of the company name, it is necessary to get it corrected if you hope to be successful in your claim for refund of a VAT.
Fill in Claim Forms Correctly and Attach All the Required Document
It is important that you fill in the claim form for each invoice, correctly and completely. Where the countries are using the electronic method, you will need to fill in all the data fields required. If necessary, scan copies of invoices and receipts and upload them. A word of caution – avoid sending/uploading files which are more than 5 MB. For countries who are still using the paper process– you should submit a file containing your completed application form including the invoice list, certificate of status, completed questionnaire as required and original receipts/invoices. The receipts/invoices should be numbered in the same order as the invoice list.
Another important point is to attach all the documents as required by that country. It makes good sense, if required, to get your documents translated into the language of the country to which you are applying for the refund. This makes is easy for your documents to be authenticated and your claim is likely to be processed faster.
At CB VAT our expert team knows forms and documents like the back of their hand. With our assistance in compiling invoices and attaching documents, your claim is 99.9% likely to be recovered.
Beware of the Questionnaire!
When submitting a claim it is crucial to answering the questionnaire with complete and utter honesty. Some of the questions are ambiguous and the technical language can become misleading. In all honesty, the questionnaire can be confusing to an inexperienced claimer. Detailed knowledge and understanding of technical terms in the VAT recovery world are a must. Any question wrongly answered can put your claim at risk of being rejected. So leave it to the experts. At CB VAT our years of experience give us a huge advantage over others.
Ensure Your Claim was Received
Just submitting a claim is not sufficient. If you want to be sure that your claim is processed, you need to ensure that the tax authorities of the country in which you have submitted your claim, have received it. Filing or sending claims for the refund well within the deadline for such claims is preferable.
Although there are some exceptions, usually claims from EU to EU countries should be submitted by 30 September of the year following the year in which the expense was made. For example, if an employee of a company travels to France for a conference and incurs expense around 5th– 7th November, 2016, the company should file for VAT refund on acceptable expenses before 30th September, 2017. For non- EU countries the deadline is generally 30th June.
Respond To Inquiries Appropriately and Within Stipulated Timelines
Many times foreign tax authorities have a query or require additional information or documents to be able to more fully process your refund claim. In such cases, you should reply/provide the necessary information in the language of that country. That’s not all, make sure that you respond within the timelines given by them/stated in their correspondence.
With CB VAT on your side, you can rest assured that any (if any) queries are handled swiftly.
Handling a Claim Denial
If you happen to be unlucky enough to have your VAT refund claim denied – don’t lose heart! Step back and check whether you have provided all the necessary documents; have you filled in your form completely and correctly; have you claimed for the correct amount of VAT. You are most likely to find that there is some discrepancy from your side – remedy the gap and submit a new claim. This time round adds the missing documents or data/information. In case, the tax authority decides that the VAT charged is not correct – contact your supplier and arrange for a credit note.
Don’t let the stress of the process bother you. The world of VAT recovery is a complex and technical one. But that’s what we are here for. You can always use the guidance and advice of a CB VAT expert and maximize your VAT refund.