Simple Ways to Save on VAT
As a tourist or business traveler in Europe, you are entitled to receive a refund on the VAT you pay for a number good and some select services. The refund on goods is the simplest to recover because the goods that you take with you out of the country are classified as “exports” for tax purposes and not subject to VAT. But since they do not become exports until they are actually out of the country, the only way to recover the VAT is to file for a VAT return.
The laws vary from state to state and the details vary significantly as well. Some states charge a VAT rate as high as 25%. Some have minimum spending limits to qualify for a return. No two EU member states have the same policies on what goods and services apply. though they are surprisingly uniform on who is qualified to receive the refund.
Applying for the refund is another story entirely. If you are a business with substantial VAT expenses, you definitely want to recover the money that’s on the table waiting for you. But the forms are complicated and time consuming.
Here are a few tips on getting that VAT return without going through the hassle of paperwork that ties up office staff for unreasonable periods of time.
1. Shop at Tax Free shops.
Just as there are duty free shops at airports and other places that use their advantage to lower prices by not charging various import and export fees, there are also Tax Free shops in Europe. Those essentially take care of the paperwork for you so that all you have to do to get a refund is to show it and the items you purchased at the customs desk at the airport.
Make sure you get the stamp at customs. Without the stamp, you will not collect the money later
The idea behind the shops is to encourage tourists to spend money because the shops make it as easy as possible to obtain a VAT refund. Too often, tourists won’t both to file the paperwork on their own, often because it is in a foreign language, and so they either forego the purchase or give up on recovering the VAT they pay.
2. Use an app that automates the process for you.
If you are traveling to Europe because of work, chances are that you are using many of the goods and services that fall under the VAT return policy, and that you are using them at a scale that makes a difference to the bottom line of your company’s travel budget.
But collecting that many in the traditional way is not so simple. The paperwork at that scale is more complicated than for small expenses that are typical of tourists. The most efficient way to get that money back and not burden your administrative staff is simply to offload it to automation. The Way2VAT app can get all the work done for you.
Using an automated app is sort of like shopping in a Tax Free store but at a level and scale that never applies to tourists. That’s why it’s so important to use the app. Alternatively, you could end up neglecting to file for the VAT return. You would not be alone. Some 50 million in unclaimed VAT return sits on the table each year waiting to be claimed.
3. Learn about the digitized tax collection system that will launch in the UK soon.
Britain will be the first country in Europe to digitize its entire tax collection system, and the process is set to launch in April with VAT payments. That means that VAT in the UK will soon be form-free, at least in the physical sense. The process is moving to the Internet, and may not be much simpler, at least at first.
The goal, however, is to simply the system for paying taxes, and ostensibly for VAT return as well. The first rollout will give some good insight into how much simpler the system is going to be. But it will be easier to improve and streamline the filing process once the digitization has gone into full effect.
After the UK, look for much of Europe to follow suit, especially if it proves successful. That means that first test case, VAT, will go a long way in helping other European countries decide if the time is right to move to digital or not.
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.