Written by Oran Dror, VP Sales at VATBox
Every year $1.3 trillion is spent on VAT in the EU alone. VAT Recovery represents a tremendous opportunity for any business operating in Europe wanting to improve its bottom line. It’s astonishing that so many enterprises are neglecting to recover eligible VAT from travel and entertainment (T&E) and accounts payable (AP). Many companies do not calculate VAT Recovery amounts, and are therefore missing a golden opportunity to re-claim tax back on those amounts. For those who are engaged in VAT recovery, only a select few rigorously optimize this recovery through an efficient company-wide process, tapping into the tremendous fiscal potential inherent in VAT recovery.
During the last two years, I was fortunate to meet executives from over a hundred Fortune 500 companies, and speak in multiple SAP, Oracle and industry events to Indirect Tax leaders across the globe. Many of these executives have not yet realized the full benefit of automation, and tolerate manual, labor-intensive internal processes to track VAT receipts. They are often unaware that they are compromising on 3rd party VAT Recovery vendors who provide a simple Excel file detailing the amounts recovered. This outdated process offers zero visibility into the overall potential VAT Recovery available across the company. Would they have any idea if the vendor processed a mere 15% of recipients? If only receipts with high VAT amounts were processed? How many invoices are eligible for corporate income tax (CIT) expense purposes but not for VAT Recovery? Our experience shows that over 58% of receipts in a typical Fortune 500 are eligible for CIT but not for VAT Recovery/Deduction on the first round of processing.
Are you able to measure your VAT recovery potential? Do you know how to instruct employees to present more qualified T&E receipts? Can you improve your bottom line with the right guidance?
And what happens once the tax office does an audit on the VAT Reclaims two or three years later? Is the Excel file sufficient to address the auditor’s concerns? Are the images of these receipts available for quick retrieval or are they buried in a box at one of the company’s warehouses?
I meet so many companies with unmet VAT recovery expectations. Unfortunately, over-promising and under-delivering is a widely used practice in this industry dominated by traditional VAT recovery vendors for many years.
Enterprises that are intent on recovering millions of Euro in VAT business returns/deductions across multiple entities and VAT registrations, as well as empowering local finance and SSC teams with adequate tools to ensure maximum security, compliance, governance across the organization, should consider the following questions before embarking on a partnership with any VAT recovery vendor.
- Will I have 100% visibility of the T&E, P-Cards and AP receipts, and their related images? What about small receipts with less than five Euro in VAT?
- Can I access all the VAT reclaims made to the different tax authorities in all jurisdictions, and their related invoices, via one system?
- Do I have visibility as to why receipts for certain business trip expenses are disqualified for VAT Recovery and for what reason?
- Are the images of receipts containing sensitive employee data stored in a secure location that complies with EU regulations and SOC 2 requirements?
- Does my VAT Recovery vendor seamlessly access the T&E system (such as Concur) and correlate employee Spend data with the relevant image? Or does my vendor simply access Concur, print the images and process them like paper?
- Am I recovering 10-15% of my Spend though a compliant VAT Recovery process?
If the answers to these questions are currently not to your liking, or you’d like to find out more about how VATBox’s services can make a difference to your bottom line, contact VATBox today.
Oran Dror is the VP of Sales at VATBox and a Board Member of the Azrieli Group. With vast experience in senior sales, marketing, online & digital and executive board director positions in Israel and internationally, Oran has led large organizations with diverse teams to high business growth in highly competitive international market landscapes.