Big Things in Store for VAT Reclaim in 2019
As 2019 takes its first tentative steps into the world, there is a flurry of activity just below the surface, waiting to break out into the open. This is true in every industry and every sector but it may be most true in the area of taxes and especially in VAT reclaim for business travel.
With it’s ambitious “Making Tax Digital” initiative slated to begin operations as early as April, 2019, the UK has the brightest spotlight. Not coincidentally, the very first part of the UK tax system to be rolled out is none other than VAT. That’s the test case that is going to show the British public that tax returns are passe and all tax work should be done through the Internet.
The initiative, which is being closely monitored across Europe, aims to simply tax collection, reduce fraud, and provide a one-stop directory for tax payers across multiple tax channels. It stands to revolutionize the way taxes are paid not only in the UK but also in the rest of Europe, if all goes well with the VAT collection.
That’s why British businesses that produce a VAT turnover of more than 85,000 GBP are about to become the talk of Europe. Those are the companies that have to register for VAT payments by April 1. After that, all of the VAT record keeping will be digitized and easily accessed.
The Digitization of VAT Continues
The UK may be at the forefront of Europe when it comes to digitizing the vast tax system, but it’s at least a few steps behind private industry. In fact, companies such as Way2VAT have been digitizing VAT return and recovery for years.
The antiquated manual system that dominated VAT return was so complex and time consuming that many companies chose to skip it entirely and leave the VAT refunds on the table. Some $50 million in VAT returns remained unclaimed across Europe.
That figure demonstrates the weakness of the recovery system and the need for innovation. And in recent years, that’s exactly what’s happened – and not just from the British government. Claiming VAT returns has become a simple process that takes just a few minutes and the Way2VAT app does all the hard work.
With Way2VAT, it’s easy to keep track of foreign travel expenses, and even to stay on top of all the different systems within Europe. Every country has its own, unique, tax regime. Keeping track of what is claimable where is a job in itself. But it’s not a job people have to worry about any longer.
Europe Seeks to Close the VAT Gap
When it comes to VAT collection reform, as the UK goes, so goes the rest of Europe. Much of the effort is directed towards reducing the amount of VAT fraud that is plaguing the system. Estimates claim that a whopping 147 billion Euros are lost every year to VAT fraud. Not surprisingly, the UK has the third largest amount of loses among all 28 EU countries, with some 22 billion Euros in losses annually.
Digitizing the VAT collection process will help governments keep closer watch on spending that is VAT return eligible, making it easier to spot discrepancies between what is collected and what is owed. Subsequently, it also makes it easier for those claiming a refund on VAT paid in Europe to show that they are entitled to get their money back.
Other countries are starting to follow suit, led by Italy and Spain. As Europe continues to undergo a digital reconstruction, there is great hope that the Internet will help standardize the VAT system. As it stands today, each of the 28 countries have their own unique policies on VAT returns. Differences include the list of goods and services that are eligible for VAT return and deadlines on filing for repayment.
Greater control of VAT invoicing will also make the process more streamlined and transparent. All of this is good news for those who are not involved in fraud. Making it easier to pay taxes online while requiring payments more often should increase the flow of revenue for the governments. And that should speed up how long it takes governments to issue the repayments.
Make sure your company gets all of the VAT returns it deserves. For the complete story on recovering VAT in EU countries, download our eBook.