How US companies can recover International VAT for Business Travel and Expenses
NEW YORK, May 23, 2019 (Newswire.com) - Global VaTax simplifies the international VAT refund process. Many US companies are not aware that they have up to 25% of their international travel spend waiting for collection. But if deadlines are missed, these VAT charges can never be recovered.
The international tax system differs from the sales tax system in the US. When tax charges are incurred on business travel and expenses within the USA, those taxes cannot be recovered. Tax charges on hotel, entertainment, and accounts payable expenses are lost forever. However, those same tax charges when incurred internationally, which are usually recorded as VAT (value added tax) and GST (goods and services tax), are recoverable. After a successful VAT reclaim submission and government approval, the spent VAT amount is refunded and wired back to the companies bank account.
Why can a company recover VAT and GST?
In order to encourage international trade, European legislation was approved to enable businesses to recover the VAT on expenses that were incurred internationally. Other countries like Australia, Canada, and Japan have the same legislation.
Most people are aware that VAT can be recovered on personal purchases made internationally. Tourists may apply for a VAT refund on gifts and merchandise purchased when taking back the items to their original country. The refund should be requested at the last port before departure from the international country.
However, individuals who are not business entities are not entitled to a VAT refund incurred on services, such as hotel, meals, professional fees, and car rental. This refund opportunity is only available to corporate entities. Individuals are limited to a VAT refund on gifts and merchandise purchased, as long as it is done at the last port before departure from the international country.
Companies may reclaim the VAT on many expenses like:
· Exhibition and conference fees
· Business entertainment
· Hotel costs
· Marketing and legal costs
· Transport costs
The good news is that US companies can also recover past VAT and GST charges as well. Depending on the country and type of VAT, statutes of limitations range between 12 months to 5 years. So a company can recover not only recent charges but also retroactive international tax charges.
So why don’t US companies apply to recover their international tax charges on services?
A European Commission report found that 80 percent of companies don't reclaim VAT expenses. Some of the reasons companies don't reclaim include:
The process is complicated. Contacting the necessary VAT authorities where the expense was incurred is challenging. Have you ever dealt with a government office? In many cases, you also require a government agent representative, which doesn't deal with companies. In addition, differing time zones and language barriers make it even harder. Then there is the matter of retrieving and sorting through hundreds and sometimes thousands of documents and expense line items. Getting around these challenges is very expensive, time-consuming and difficult. Financial experts suggest that the costs incurred to process the claim often outweigh the benefits.
Global VaTax provides a business VAT refund service from start to finish.
How much will this service cost?
If the VAT refund is not successful, it won't cost you a penny. Global VaTax simply keeps a small percentage of a successful refund.
Global VaTax also has an advanced Cloud application which extracts all your travel and expenses, including accounts payable costs, in a matter of a few minutes. All the document sorting and submission is done by the company. In many cases, the client won't have to spend more than an hour or two from the start until the VAT refund is accomplished.
There are deadlines in order to receive a VAT refund from previous years. So, don't procrastinate the process. Once the deadline has passed, the 15-25 percent potential refund on international expenses is lost forever.
Contact us today to start your international business VAT reclaim before the deadlines at https://globalvatax.com/contact.
Phone: 212 464 7524
Source: Global VaTax