Is your business expanding into international markets? If so, congratulations on your company’s continued growth. Unfortunately, a big part of doing business in foreign countries is dealing with international travel expense reports, which are complicated and can get unwieldy rather quickly. Processing international travel expense reports are a necessary, but expensive part of your business. However, there is a way you can recoup some of that money.
Many countries such as the UK, Canada, countries in the European Union, Singapore, Japan, South Korea, and Australia charge a value-added tax (VAT) or goods and services tax (GST). A VAT is a consumption tax and designed to tax only the end consumer of a product or service. Under the VAT rules of most of these countries, the travel expenses of non-resident businesses are refundable.
What Travel Expenses Can Be Recovered?
Generally, VAT paid on the following business travel expenses can be recovered:
- Conference or Trade Show Fees
- Telecommunications Services
The rules for VAT refunds differ based on each jurisdiction. For example, the UK accepts electronic receipts or invoices kept as part of automated expense report software, but EU countries require original invoices to be submitted with refund requests.
Therefore, it is important that your employees engaging in international business travel record and document their expenses accurately and with great detail. Unless your company has a department specialized to account for the VAT rules in numerous jurisdictions, it is best to cover your bases and have your employee obtain as much documentation as possible.
Automated expense report software can help employees do this by recording expenses at the time of transaction and by saving pictures of all documentation. Regardless of whether you use automated expense report software, it is a good idea to keep original records of all international business travel expenses so you can maximize your VAT refunds.
The savings from paying attention to VAT refunds can be significant; in some countries, VAT can amount to almost a quarter of all travel expenses.