How to Ensure You Get a VAT Refund When You Take Business Guests to Dinner
One of the most common business expenses – as well as the most tasty – is taking business guests to dinner. Great food, nice atmosphere, and hopefully a business deal or a strengthened relationship at the end. You’ll even get your VAT back, because, of course, taking businesspeople to dinner is a business expense.
The one thing that could give you indigestion is if the tax authorities refuse to issue you a VAT refund.
How you do avoid that situation and ensure you get your VAT return? Let’s take a look at four simple but critical things to check.
Make sure your company name/tax ID is on the receipt
You’d be surprised how many restaurant receipts we’ve processed here at Way2VAT that did not have the company name, or the tax ID, or either one. Apparently this one is so obvious that it’s often overlooked, so make sure to check that your company information is on the receipt.
List the names and companies of your dinner guests on the receipt
This one is slightly less obvious. After all, your company paid for it; that’s why your company name and tax ID are on the receipt!
But just because the company paid for it doesn’t automatically make it a expense eligible for a VAT refund. Taking out business guests for business purposes is a business expense. Taking out your French cousin for her birthday while you happen to be on a business trip in Paris may count as a business expense for your meal (after all, you do have to eat) but you would need a significant stretch of the imagination to count her meal as a business expense.
You therefore need to prove that your dinner guests are in fact business guests. And you prove that by having the restaurant list your guests’ names and companies on the receipt.
Don’t accept any receipt that says “copy”, “duplicate”, “this is not an original VAT receipt”, etc.
To get a VAT refund, you need an original VAT receipt.
Ensure that what you receive from the restaurant and what you submit in your applications for VAT refunds is the genuine, bonafide, original VAT receipt.
Confirm that you were charged the correct amount of VAT
Some countries use a reduced VAT rate for restaurants. As with any reduced VAT rate, your company will only get a refund for the reduced rate amount. If you were accidentally charged the standard rate and you paid it, you’re out of luck.
Cyprus, for example, has a reduced VAT of 9% for restaurants. Before you leave Cyprus’ Samisen Japanese Teppanyaki Restaurant after having eaten your fill of sushi and other delicacies, double check your bill and make sure there’s a 9% VAT charge listed. If some confused clerk accidentally charged you the Cyprus standard VAT of 19%, you’re not getting all that back.
An ounce of prevention is worth a pound (or a Euro) of VAT return
Now that you know what to look out for, make sure you check. Even if you frequent this restaurant for business dinners, and the receipts have never caused problems, it’s always worth a second glance. The minute you spend checking the receipt for these 4 critical elements is a worthwhile investment to ensure that your company receives the full VAT refund.