80% of Foreign VAT remains Unclaimed

If you don’t currently claim it back and you would like to do so in a cost effective, trouble free manner, then you certainly should read on! You will even see how a claim relating to a simple hotel bill could impact your bottom line significantly.

Every year Irish enterprises needlessly give away millions of euros in unclaimed foreign VAT.

VAT is meant to be a tax imposed on final consumers and not on a business. Businesses act only as a collecting agent but 80% of these fail to reclaim their entitlement to foreign VAT. These businesses unwittingly add up to 20% to their foreign costs

A recent survey indicated that other European businesses are twice as likely to reclaim foreign Vat, as are Irish enterprises. Smaller Irish enterprises are even less likely to reclaim than their larger counterparts.
6 Reasons that Irish Business leave behind their Foreign VAT

1. Irish enterprises are unaware of the fact that they are entitled to reclaim VAT incurred on services abroad.
2. Some businesses are aware of the entitlement but are put off by the procedures involved, and see it as a distraction from their core activities. They also fear a risk in approaching a Foreign Fiscal Authority.
3. In most European countries it takes approximately 6 to 8 months to receive a refund and as a result many companies don’t pursue repayments even though significant sums could be involved.
4. Companies lack the expertise to get around the layers of Fiscal bureaucracy. Without extensive knowledge of each foreign country's legislation and the necessary practical experience, businesses find it almost impossible to obtain refunds.
5. In Ireland VAT on hotel and travel expenses cannot be reclaimed in an enterprise’s normal monthly VAT returns and they assume the same rule applies elsewhere. Thankfully most other European countries are not as restrictive and allow these items.
6. In the bad old days when Corporate Taxes were high up to 50% of the recoverable Foreign VAT was effectively offset by these high taxes. This is no longer the case.

European VAT legislation (Eight VAT Directive) is framed to ensure a level playing field for all businesses. It aims to ensure that foreign businesses cannot be disadvantaged by additional VAT costs, which a local business can automatically recoup through its monthly VAT returns.

Could you Outsource your VAT Reclaim
Could you imagine having your entitlement assessed on a “no obligations” basis? Fees for this service are based entirely upon successful refunds and are only charged when refunds are received.

A major feature of outsourcing your foreign VAT reclaim service is that it requires zero input of a clients resources or manpower. The Specialist could undertake the whole procedure from start to finish. The only requirement placed upon a client is to allow the specialist access to the client’s invoices. Total confidentiality is assured.

The specialist then extracts the reclaimable items from client’s files, and prepares all the relevant documentation for presentation to the relevant Fiscal authorities. Clients are regularly updated on the status of their claims.

Vat can be reclaimed by Irish businesses in all European countries. A business can significantly cut its foreign costs. Recoverable VAT makes up 19.6% in France, 17.5% in the UK and 19% in Germany of costs incurred. Large as well as small claims are catered for.

Typical expenses include training courses, meals, car hire, petrol, and promotional materials as well as supplier invoices.

Irish enterprises currently have an opportunity to reclaim their VAT entitlements in all European countries backdated to January 2006. VAT in the Netherlands can be reclaimed back as far as 2002.

Claims must be lodged with the relevant authorities before the end of June 2007 otherwise the entitlement ceases and is lost forever. Global Tax reclaim can advise and assist enterprises with reclaims.

Global Tax Reclaim is an associate partner of CCMS. Reclaim of past expenditures is just one of the many ways that a company can significantly reduce their cost base. The company is staffed by VAT professionals, who have amassed over 60 man-years experience between then in the VAT field.

If you would like to find out more on either your foreign VAT position or indeed on any other area of your business that is eating into your profits, please fill out our Cost Control form on www.costcontrol.ie and one of our consultants will contact you.

Cost Control Management Systems, are a team of experts, with over 200 successful cost reduction projects between them. The team, are quickly able to spot if there is money saving potential, in any of the cost categories , that your company may feel they are overspending on. Either fill in our web form at www.costcontrol.ie or call us now on.