VAT Refund Eligible Expenses for Business Travel to Europe

  September 6, 2017

Business travel in European countries is huge and is expected to grow at a steady pace.  According to the Global Business Travel Association, business travel spending in 2016 was projected around $211 billion with a projected increase to about $225 billion in the year 2017 – that is an increase of $14 billion in just one year

Most countries in Europe levy a sales tax known as Value Added Tax (VAT) on all goods and services purchased/availed of within their respective countries.  This tax is paid by all – residents and visitors.  As a result your company ends up paying VAT on all your expenses during your business trip – right from your travel expenses to your hotel booking to your restaurant bills. As a non-EU resident, your company is entitled to get a refund on the VAT paid by you. However, it has been observed that a large amount of VAT remains unclaimed every year, either due to ignorance or the complicated process or faulty applications.

An astronomical amount of € 20 billion is left unclaimed every year!!

Let’s look at the VAT refund eligible expenses for which your company is eligible to reclaim VAT.

  • Business Travel: These expenses include petrol, car rental, meals, accommodation, and telecommunication. The procedures and amount of refund vary from country to country.
  • Seminar and Professional Training: VAT refund can be claimed for expenses incurred for employees participating in seminars, meetings, exhibitions and professional training courses.
  • Conventions and Events: Similar to seminars, VAT refunds can be claimed by your company for business travel and expenses for employees who have attended conventions and/or business events in European countries.
  • Exports: A variety of taxes are levied at different stages when goods are exported to European countries.  Some of these taxes can be reclaimed.
  • Aviation: Expenses relating to the airline industry and companies using corporate jets.  Although the calculation of refund is complicated, some amount can be recovered.  Once again, the amounts vary from country to country
  • Supplier Invoices: If your company procure goods and services from foreign suppliers they apply VAT to these goods.  It could happen that the suppliers levy incorrect VAT amounts, often due to a lack of understanding tax law.  Being able to identify and catch such errors could save your company a sizeable amount of money.

The amount of VAT refund claimable against these activities broadly falls into 3 categories:

  • Refundable – The entire amount of VAT paid can be claimed
  • Partial – Certain stipulated percentage of the VAT paid can be claimed
  • Restrictions Apply – The deductible amount is subject to certain restrictions.

Once again the categories that apply differ from country to country for different business expenses and activities. What could fall under a refundable category in one country may fall into the restrictions apply in another country.  You can download our VAT refund chart that provides complete details of each country offering VAT refund, business expenses, and activities on which VAT refund is available, VAT % for each country and what portion of VAT expenses are eligible for refunds.

A lot of people and companies are unaware that it is relatively easy for them to calculate the amount of refund you may get on your business travel and related expenses. Gone are the days where you were dependent on someone or any agency to do the needful for you – many times missing out on the right amount of refund as they had miscalculated the amount!  Travelled to Europe on business?  Use this simple VAT refund calculator to find out how much VAT refund are you eligible to apply for. To be better equipped, read our next article common pitfalls to avoid while claiming foreign VAT to ensure you don’t do the same mistakes that many companies do during VAT recovery process.