U.S. companies may claim a VAT refund on most of their business transactions in Europe, U.K., and many other countries. Most U.S. companies are not aware that there is money due to them, and how to start the VAT refund process. If deadlines are not met, the refund is lost forever.
What is VAT? The United States has a sales tax system but many other countries have a VAT system. Value Added Tax (VAT) is a consumption tax, that is levied on both goods and all services in most international countries. The percentage of the VAT charged can be up to 25 percent of the Invoice amount, which is a significant cost.
The national tax systems of Europe, UK, Canada, Japan, South Korea and Australia allow for a refund of VAT (tax) to most non-resident business entities worldwide. In most cases, U.S. companies are eligible for a VAT refund for business done internationally. Industry estimates suggest $20 billion in VAT is left unclaimed annually. *
How far back can the client receive a VAT refund?
VAT refunds apply in most cases for up to 18 months back, in some cases as much as five years.
Is there a deadline?
U.S. companies reclaiming VAT from the United Kingdom have a deadline to submit VAT invoices by December 2017 for the period for VAT incurred between July 1, 2016, and June 30, 2017.
U.S. companies reclaiming VAT within EU countries have a deadline to submit VAT invoices by June 2018 for the period for VAT incurred between Jan. 1, 2017 and Dec. 31, 2017.
What is the VAT refund process?
The U.S. company must prepare the various VAT refund forms required. In no way are these forms connected to your company's regular taxes. They are simply VAT refund registration forms.
The U.S. company must extract and sort through all expenses from their expense management system, calculating VAT rates per expense type and country.
VAT refund forms are required to be completed in foreign languages and submitted to relevant tax offices.
VAT registration in the foreign country is sometimes required depending on the business structure.
The U.S. company must communicate with the various international tax offices, should they have queries for the claim.
Why aren't U.S. companies reclaiming their VAT?
The VAT refund process is complex and requires a detailed understanding of the regulations and requirements in each country. Each country also requires their documents to be completed in their local language (German, Dutch, etc.) The VAT rules and rates also vary from country to country and expense type. According to the Organization for Economic Co-Operation and Development, 72 percent of the businesses surveyed found reclaim procedures difficult to navigate, and 20 percent were unable to recover any VAT expenses at all. * Another challenge is that in many cases, U.S. companies don't keep their original invoices.
What to do next?
Contact Global VaTax for a free VAT refund consultation. The Global VaTax group has over 30 years' experience in assisting companies to recover their VAT refund. The process for the client is as simple as allowing access to expense management software. VaTax Cloud takes over from there, extracting from Concur and other EMS or you can choose to upload an Excel file. It calculates VAT for each expense type, implementing the various rates within each specific country. The Global VaTax group submits claims to all foreign tax offices in their foreign language. From invoice collection through the VAT refund process, with the money ultimately being transferred to the client's account there is full visibility through every step of the process. VaTax Cloud generates interactive charts with full drill-down capability, so you can see every expense line item that generates the reports.
How much does it cost?
There are no upfront fees of any sort. If the client does not get a VAT refund, there are no fees. Global VaTax only keeps a percentage of the VAT reclaim. There is no risk or additional cost for the client but the potential of up to a 25 percent refund on international expenses can add a very significant increase to the bottom line of any U.S. company.
Contact Global VaTax for your free assessment call.
* Organization for Economic Co-operation and Development, Survey 2016
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