Calculate the recoverable VAT & GST hidden in your employee spend

VAT – Value Added Tax – or GST – Goods & Services Tax – may be terms you may see coming by a lot or just from time to time. In finance, it is not always correctly recognized that this VAT or GST can in many cases, be recovered.
Thus, businesses should receive a refund from authorities and not simply add this VAT or GST to the expense account. We will explain to you what VAT or GST is and how you can claim and calculate it in five easy steps:
The Blue dot calculator improves compliance with global tax regulations and maximises Value-Added Tax (VAT) reclaim through a dynamic data completion and VAT compliance platform. This calculator uses your inputs and industry expertise to estimate the available VAT reclamation opportunity.

What is VAT or GST?

VAT (Value Added Tax) is a tax that is added on top of the value of the purchase. Depending on the type of purchase, which can be a good or a service, a ’necessity’ such as bread and water, or a ’ regular ’ or ‘luxury’ item such as a mobile phone or fuel, will attract a different VAT rate.
The supplier will charge this VAT to you if you buy the good or service. And you also do have to pay it at the same time. Ouch.

To make it a bit easier, let’s talk about VAT going forward while at the same time covering GST. The principles are similar; it mainly depends on how the country decided to name it.

Who can claim VAT?

The question is whether it is “Ouch”? Your tax advisor may say: “It depends…”. Yes, there is some truth in that.

Taxes and VAT, in particular, are complex. But we want to keep it simple for you while we deal with that complexity. Thus, you can get this VAT back if you are a business and making a purchase for business purposes.

Like always, there are also exceptions. We don’t want to name them all, but the main rule is that if your sales are not subject to VAT, then you also can’t claim VAT. Thus, if you are a business that charges VAT, GST, Sales Tax or Consumption Tax on its sales, chances are high you can claim VAT you have paid on your purchases.

Where to look for VAT?

VAT is everywhere. Well, almost. But you can safely assume that if you go on a business trip and take a taxi, park your car, buy your business guest a dinner and sleep the night in a hotel, then most likely on, all charges are VAT. Even when working from home.

Is it then a European thing?

No, not really. Although VAT rates in Europe are relatively high, you will see it in Latin America, Canada, Russia, the Middle East, and Asia all the way down to Australia and New Zealand. Yes, also in Africa. As a matter of fact, more than 170 countries have it.

So, in a way, VAT ìs everywhere. The one big nation that doesn’t have VAT, is the US. In the US there is a Sales Tax. It works a bit differently and generally you can’t claim it back, like you can claim VAT back.

How to claim VAT refunds?

Now we get to the most exciting part; how do I get this VAT back? No worries, we will tell you how. If you travel overseas, there are agreements between countries. If there is such an agreement then you can claim all or some of the VAT you have paid.

You do this by submitting a refund application in the countries you traveled to. However, you may also buy something online or while working from home. Did you travel within your country or make local orders? Then you must ensure your finance team will receive all details to claim VAT from those local tax authorities.

How much VAT can you claim back?

Finally, you want to know how much you can claim per country. You could maybe get a ballpark figure based on your total spend. However there are so many factors to be taken into account that such an outcome easily results in being quite off from what you would be getting in reality.

Things to be taken into account are the countries you mostly travel to, whether these have a VAT system, and whether these also allow refunds. Also, the types of purchases may have an impact on the outcome. And lost but not least, the quality of receipts brought home by your employees.
That is not even so much on the readability of a slightly wrinkled receipt but especially on the contents of such an invoice. The big question is thus whether these receipts meet all local tax requirements to allow you to recover that VAT. If not, the VAT is lost!

Therefore, the best thing to rely on is benchmarks. Preferably on millions of transactions. Even better, hundreds of millions of transactions. Data you would not easily have available in-house, and it will be challenging to draw conclusions from it even if you have it. Luckily, we do have such data and have processed and structured it, to generate some solid benchmark data.

For you, we have included that wisdom in our Value-Added Tax Reclaim Calculator. Simply complete a few primary fields, and we can have the analysis started. And since we don’t have someone to calculate that, you will have your VAT opportunity in your mailbox in no time.