VAT\GST Recovery for Financial Service Providers

July 30, 2019

When it comes to filing a VAT\GST reclaim, all businesses find themselves making judgement calls about which invoices to include on their VAT\GST return. Concerned about your bottom line, you’re reluctant to give up any of the VAT\GST refund that you deserve, but the cost of the work hours needed to identify the relevant data on each VAT\GST invoice could add up to more than the amount of VAT\GST you’d receive from it.

When you have to calculate foreign VAT\GST, which is a much more time-consuming process requiring that you manage VAT\GST receipts that are torn, stained, or faded, you’re inclined to give up before you start. And when you’re a financial services provider, you face even more temptation to sacrifice your foreign VAT\GST refund.

Partial exemption on VAT\GST recovery

Financial services providers tend to have a partial exemption from VAT\GST reclaim. This is because many of the services you provide are VAT\GST exempt, such as insurance or mortgage services.

Hence the partial exemption rate. For example:
● If your mortgage company has a VAT\GST recovery rate of 50% and
● An employee submits a hotel bill for £100, including £20 VAT\GST
● You can only request a VAT\GST refund of £10 – 50% of the total VAT\GST paid

Once you’re only able to claim part of each VAT\GST bill, the value of your VAT\GST reclaim drops dramatically. Some banks have a VAT\GST refund rate of less than 1% due to the type of services they provide. As soon as you start to include exemption, the company ends up spending more to pay an HR employee to process the VAT\GST return than they can expect to make back in refunded VAT\GST.

Foreign VAT\GST return rate mirrors the domestic VAT\GST rate

The challenges mentioned above are plenty to measure, manage and calculate when it comes to domestic VAT\GST returns, which are pretty simple and straightforward to complete. But in the EU, tax authorities in other member states typically match the domestic VAT\GST recovery rate. For example, if you applied for a foreign VAT\GST refund for VAT\GST paid in Germany, the German tax authorities would ask your domestic VAT\GST rate and apply it themselves.

Your company is left facing a complex VAT\GST reclaim process for a small amount of refundable VAT\GST, like the amount paid on a cup of coffee in the airport. Thanks to the partial exemption calculation, this small amount of reclaimable foreign VAT\GST becomes miniscule. As a result, many financial services companies simply opt out from pursuing foreign VAT\GST refunds.

Outsourced VAT\GST recovery solutions are too expensive

One alternative is to turn to outsourced VAT\GST reclaim solutions, which take over the hassle of managing your VAT\GST return in exchange for a percentage of the recovered VAT\GST. But we’re already talking about very small amounts of VAT\GST each time. Paying an external company up to 50% of the recovered VAT\GST is not worthwhile.

Outsourced VAT\GST recovery solutions don’t want the work

What’s more, outsourced VAT\GST recovery solutions don’t even want the work. They make their money by taking a fixed percentage of your refunded VAT\GST as their fee. It will take them a significant amount of time and effort to complete and submit your VAT\GST return, and they can expect to make only a minimal amount due to the tiny VAT\GST refund rate. It’s not worth it for them either.

Due to this reasoning, over £15 billion of refundable VAT\GST goes unclaimed by businesses each year.

Why WAY2VAT is different and thus worthwhile

Fortunately, there’s another solution – WAY2VAT. Our patented technology uses artificial intelligence to read and understand your VAT\GST receipts, completely automating the process of deciphering, verifying, and entering VAT\GST into your VAT\GST return. It reduces reliance on a shared service or processing centre to capture this information, making WAY2VAT the only automated VAT\GST recovery solution to fully eliminate manual data processing from the VAT\GST reclaim process.

Our low overheads mean that we can pass on the savings to the client, charging reduced service fees and mitigating the risks of unclaimed expense VAT\GST. Unlike most other VAT\GST recovery firms, WAY2VAT doesn’t have any minimum threshold on VAT\GST receipts. We’ll pursue every drop of VAT\GST, no matter how small, because we know that several hundred cups of coffee in the airport add up to big value for your company.

For all the details about filing successful VAT\GST returns in the EU and other countries around the world, download our eBook.