Each year, billions of dollars in VAT is left unclaimed globally. More than $20 billion in fact – with most of it a result of unawareness, language complications, the need for manual upkeep and a lack of resources within organizations to handle the reclaim process.
Aside from that, businesses that operate in countries where they are not established or VAT-registered incur significant amounts of expenses or VAT paid in those countries – including employee travel and lodging, vendor service charges and local purchases of goods.
VAT in Europe: Millions of Dollars Left Unclaimed
In European countries in particular, business travel continues to be both a major expenditure and opportunity, with 10% of global travel spend available to be reclaimed. Business travelers visiting Europe unknowingly leave behind millions of dollars every year in refundable VAT.
Currently, standard VAT rates in the EU range from 17% to 27%, with reduced rates ranging from 4% to 18%. The EU Directive that became effective in 2010 introduced new procedures for businesses registered and established for VAT purposes to request a VAT refund incurred in other member EU states. The rules for non-EU businesses (under the 13th Directive) are similar for the most part to those for EU businesses, with some exceptions to allow for reciprocity agreements or fiscal representatives that must be appointed in some member states.
Either way, most business-related goods and services are fully eligible to be reclaimed and recovered – and the opportunity to claim these refunds represents a gold mine of possibilities for those willing to do so.
Have No Fear…A Solution Awaits
Organizations today need not fear the process of claiming VAT refunds. Oftentimes it’s simply a matter of revisiting ‘the way they’re doing business.’ Organizations can benefit greatly from a more automated, technologically-advanced process for filing and reclaiming VAT, giving them important benefits such as tax reductions, fraud prevention, better transparency, and more. And perhaps most importantly, they can enjoy a better way to manage their VAT expenses, and ultimately improve their bottom line.
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The article was written by Aviv Barshaf, Co-Founder and CFO of WAY2VAT. Visit us at: www.way2vat.com