Every year, a significant amount of expenses are generated by employees traveling abroad for business. In Europe alone, a staggering EUR 159.5 billion in VAT revenue remained unclaimed in 2014, according to figures released by the European Commission. A significant portion of this unclaimed VAT was forfeited due to invoices that were submitted with incomplete or incorrect information. While the company may choose to reimburse an employee for business trip expenses that were submitted on a faulty invoice, the company itself is unable to reclaim the VAT paid, leading to millions of dollars lost every year due to improper VAT recovery. These funds could be easily recoverable by following a few simple guidelines that will ensure that your organization can reclaim the VAT rightfully due to them.
Based on our years of expertise in the field, we have culled a number of basic guidelines to VAT recovery in order to help employees who travel for business submit proper invoices for their T&E expenses, including expenses for hotels, restaurants, taxis, car rental, fuel and conferences.
1. Original invoice only
- Make sure to bring back an original invoice. An original invoice should have the word “Invoice” written in English or in the local language i.e. “Rechnung” (German), “Fattura” (Italian), “Factura” (Spanish), “Faktura” (Swedish), “Factuur” (Dutch), “SZÁMLA” (Hungarian) or “Factur” (French) “Kvitto” (Scandinavian).
- Do not accept a copy / proforma invoice / bill / credit card slip, “Ricevuta” (Italy), “SZÁMLA MINTA” or “SZÁM” (Hungary).
- Credit card slip / receipt – is not sufficient without the VAT invoice. You will often need to request the VAT invoice explicitly.
2. Correct legal entity name and official address
- Ensure that all invoices (besides simplified invoices – see section 3 below) clearly display the correct legal name of your company and its official address.
- An invoice displaying the name of an entity or sub-group within the company is NOT eligible for VAT refund. Double check that the official company name is mentioned on the invoice.
- Do not include the employee’s home address. Invoices should always display the company’s address or show no address at all.
Tip: When checking out of the hotel, provide the hospitality desk with your business card so that they can accurately input for VAT recovery the official company name and address on the invoice.
3. Additional invoice requirements
Simplified invoices – Simplified invoices do not have to mention in specific the recipient details and the VAT amount
- For invoices for smaller business trip expenses under EUR 150 for items such as public transportation, taxis and restaurant bills, a simplified invoice with a VAT breakdown is acceptable. In Germany the treshold for simplified invoices is EUR 250 (per Jan 1 2017).
- In cases of a multi-page invoice, ensure ALL pages are submitted.
- Check that all the vendor details are included on the invoice, including invoice number and invoice date.
- Confirm that there is a VAT indication mentioned on the invoice.
4. Special requirements in specific countries
- Switzerland and Belgium – The company name is required on each invoice – even on an invoice from fast food eateries or public transportation. Ask the cashier to include it.
- Portugal and Spain – The company name and VAT number are required on each invoice – even on an invoice from fast food eateries or public transportation. Ask the cashier to include it. The only exception in Portugal, where company name is not required on invoices for parking and tolls.
- Italy – The invoice must include the word “Fattura” and NOT “Recivuta” and must contain both the company name and the employee name. You must have proof of payment i.e. a credit card slip or an indication on the invoice that it was paid.
- Germany – When charging items in a hotel bar to your room, please keep (and submit) the bar voucher as well.
- Czech Republic, Romania and Hungary – The invoice should be issued in the local currency. Amounts in Euros may also appear on the invoice for your convenience.
Adhering to these guidelines will ensure that your organization has full control over its T&E tax spend and recovery, thereby ensuring compliance and data integrity, and ultimately boosting its bottom line. To maximize eligible VAT refunds, many companies choose to implement VATBox, an automated, enterprise-wide, cloud-based VAT recovery solution, that streamlines the global VAT recovery process. VATBox gives companies full visibility on VAT taxes paid on business trip expenses, including hotels, restaurants, taxis, car rental, fuel and conferences.