Don’t Leave that VAT Money on the Table – Germany

In the world of International business, travel at times can be enjoyable, sometimes it can be downright painful.

Besides the busy entrepreneurial lives your employees lead for the company, when departing for that 3 day or 3 week business trip, they need to know what to pack for the weather, any electrical converters they may need for that 16 hour layover in Rome, and so on.

While they’re all in the same boat, airplane or train in many ways, they are all individuals.

One thing that binds all companies that have employees hopping the globe for business, is that many of them overlook an efficient way to reclaim VAT. What’s more is they need to train their employees on easy-to-follow procedures to record their VAT-related expenses.

Companies want their globe-hopping employees to have all their VAT receipts available immediately upon their return for Car Rentals, Hotels, Buses, Taxis, Meals and all business-related expenses.

Now, the rules for VAT in different countries, even when travelling to and/or within the EU are not so simple. Each country has their own set of rules and regulations.

Because of the complication and downright confusion, a lot of money is left on the VAT table, going unclaimed, over 20 Billion Euros a year to be exact. Again, a lot of this is due to the confusion; filling out paperwork, language barriers and as we said the different rules and regulations regarding VAT.

With companies spending as much as 5 percent of their total annual budget on travel, it is a downright necessity for them to capitalize on reclaiming what is rightfully theirs. As much as 4-10% of their total travel expense spend is eligible for reclaim.

A big reason for this VAT money going unclaimed is manual processes. Accounting departments are overwhelmed, many of them unorganized, leading to lost and misplaced invoices, not to mention the complicated processes and language barriers we mentioned earlier. These reasons are just a few of the major ones and why VAT refunds, money that is rightfully yours is not reclaimed. It’s about inefficiency.

There is a deep level of understanding of taxation technicalities and accounting in order to submit a claim for VAT.

There’s a lot of back and forth that is required with administrations and other VAT related queries. On top of that, even when the forms are all meticulously filled out and all the necessary documents are attached, it could still be a couple of months in order for the reclaim process to be completed.

Smaller companies may only have one or two employees who travel. However, bigger companies can see as many as 10, 20, 30, 40 or more. You get the picture. It’s a complicated process no doubt. But, it doesn’t need to be. This post we hope will help ease the VAT recovery pain.

Germany, a Western European country with vast mountain ranges, flowing rivers and abundant forests is a defining country for what modern-day Western Europe is all about. Known for its culture embodied by its museums and diverse nightlife, it is also known for most every traveler’s end to a very hectic day, its beer halls.

Here are some basic phrases your traveling employees should keep in mind; first in English and then in German when purchasing items covered by Germany’s VAT rules. If a business traveler is unsure of whether an item is covered by a particular country’s VAT rules, it is best to be safe and get a receipt anyway.

Please give me:

  • An original VAT invoice
  • With my company name and address
  • VAT rate and value shown
Bitte gib mir:
  • Eine Original-Mehrwertsteuerrechnung
  • Mit meinem Firmennamen und meiner Adresse
  • MwSt.-Satz und mehrwertsteuerbetrages
The German VAT rates are as follows:
  • Standard Rate 19%
  • Reduced Rate 7%
  • The reduced 7% rate is used for some daily goods and services like food, local public transport, newspapers and hotels.

For the complete story on recovering VAT in Germany and other EU countries, download our eBook.