5 Foreign VAT\GST Reclaim Mistakes That Will Get Your Claim Dismissed
When you or your employees travel abroad, you’ll be charged foreign VAT\GST on the goods and services that you buy. VAT\GST or other sales taxes are aimed at that country’s citizens. A business travel visitor like you can make a foreign VAT\GST reclaim to get that tax amount back, by filing for a VAT\GST refund.
A VAT\GST return can be extremely complicated to complete correctly. You’re often dealing with a number of different countries, each with their own VAT\GST refund regulations. Your VAT\GST return might involve multiple different languages and currencies, many different types of expenses, and a muddling mix of personal and business expenses in the same VAT\GST invoice. Faced with so many challenges, it’s understandable that as much as £15.3 billion of refundable foreign VAT\GST charges go unclaimed by business travelers each year.
Even more foreign VAT\GST charges go unrefunded because the VAT\GST refund request was completed incorrectly. If that’s happened to you, read these 5 common foreign VAT\GST reclaim mistakes that will get your VAT\GST return dismissed, so you can avoid them in the future.
- Your VAT\GST invoice shows the wrong nameThe foreign VAT\GST invoice that you submit with your VAT\GST return usually needs to be made out to the company, and show both the company name and the company tax ID. If the VAT\GST receipt was issued in your name, your VAT\GST reclaim request is very likely to be rejected.
Find out when you need the company name and tax ID right here.
- You didn’t submit a receipt of paymentSubmitting a foreign VAT\GST reclaim for goods imported from a supplier brings its own confusion. The supplier often sends you a payment request, which includes the foreign VAT\GST to be paid. Then they send the receipt of payment after you settle the bill. You end up with two documents, each of which shows the total amount of foreign VAT\GST – but only the receipt of payment counts as a VAT\GST invoice for your VAT\GST return. If you send the payment request as part of your VAT\GST return, your VAT\GST refund will be denied.
- Your supplier charged the wrong amount of VAT\GSTIn an ideal world, your supplier always charges the right amount of VAT\GST. But let’s be honest – your supplier is only human. In certain countries, the VAT\GST laws are very complex, making it easy to make a mistake if you aren’t an expert.
It’s also common for different good or service purchased to be listed on a single VAT\GST invoice, but without making it clear that each item has a different rate of VAT\GST. Unless you check every invoice before submitting it (which is impractical in a manual VAT\GST return system), you could end up requesting the wrong foreign VAT\GST amount on your VAT\GST reclaim for many of the listed items.
- Your receipt isn’t validThe VAT\GST receipt that you submit for your foreign VAT\GST refund needs to follow the VAT\GST reclaim guidelines for that country, but it can be hard to be sure when your receipts are in different languages and have differing formats. It’s important to check that your VAT\GST invoice complies with local VAT\GST reclaim standards.
In general, you’re required to send or scan the original VAT\GST receipt. A receipt that’s marked ‘copy’, ‘duplicate’, ‘not an original VAT\GST receipt’, or other similar wording won’t be considered proof of foreign VAT\GST payment, and won’t be accepted for a VAT\GST refund.
- You claim more VAT\GST than you paidIt’s easier than you think to accidentally claim a VAT\GST refund for more than you paid, especially if you get a later discount or refund on the purchase. Your original VAT\GST invoice might list the full expense, including the full amount of foreign VAT\GST. A later receipt covers the discount or refund, which lowers the total amount of VAT\GST that you ultimately paid.
Submitting a VAT\GST return for the original amount of VAT\GST means claiming more than you paid. If this happens, you could be fined for making a fraudulent VAT\GST claim, as well as losing out on the VAT\GST refund.
Foreign VAT\GST reclaim mistakes are easy to make, but you can prevent them when you use the right tools. For all the details about filing successful VAT\GST returns in the EU and other countries around the world, download our eBook.