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What you NEED to know about International Vat claims

by , 03 January 2014
Your company may be entitled to claim a Vat refund on a number of business expenses incurred in other countries. Here's what you need to know about International Vat claims.

You know that you can claim South African Vat as input tax. However, you may be neglecting to claim Vat refunds on international business expenses. Now it's your chance to exploit this untapped reserve.

International Vat claims explained

Vat in European and other countries: What are the Vat implications?

  • Vat (Value Added Tax) is levied in EU (European Union) countries and other (non-EU) countries on supplies of goods and services.
  • Vat stands for 'value added tax' and it is value added at each transaction stage.
  • The Vat rate differs between member states and varies from 5% to 25%.
  • The tax is added to the total invoice and is paid to the government.
  • It's recognised in different countries under different titles such as ITA, GST, MWST, TVA and MOMS.

The Practical Vat Loose Leaf Service explains that to encourage international trade, European legislation was adopted in the 1990s to enable businesses to recover the Vat on expenses that they've incurred abroad.

This means companies like yours are allowed to reclaim the Vat on the following expenses:

  • Exhibition and conference fees
  • Business entertainment
  • Accommodation costs
  • Telecommunications
  • Promotional materials
  • Transport costs
  • Printing materials
  • Restaurant meals and much more!

Please note that as is the case in South Africa, you'll need to keep and provide all your relevant invoices if you wish to reclaim Vat.

International Vat claims: Take what you're entitled to

A European Commission report found that 80% of companies don't reclaim Vat expenses to which they're legally entitled. Some of the reasons companies don't reclaim include the following:

  1. Companies don't know when they can claim.
  2. The process is complicated. To reclaim the foreign Vat from overseas travel expenses it's necessary to contact the Vat authority where the expense was incurred. Of course, this is easier said than done.
  3. Distant locations and language barriers can make things difficult. The costs incurred to translate the materials and the difficulties dealing with the different time zones make it tough for companies to liaise with the foreign Vat authority.
  4. It can be expensive, time-consuming and difficult. Financial officers suggest that the costs incurred to process the claim often outweigh the benefits.

International Vat claims: How to take the trouble free route

According to the Practical Vat Loose Leaf Service, certain companies, such as VATit (www.vatit.com), Taxback International (www.taxbackinternational.com) provide services on a no refund – no fee basis!

When your business is entitled to a refund, they deduct a processing fee from your refund cheque. The processing fees usually vary per country. It may be a good idea to consider these companies.

Now that you know about International Vat claims, make sure you don't neglect to claim Vat refunds on international business expenses.

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