What is VAT Reclaim And 4 Benefits You Need to Know

Why VAT reclaim matters more than you think

Every year, organisations lose significant sums of money simply because they lack a reliable VAT reclaim process. While the shift to electronic VAT processing might feel like an initial hurdle, the long-term benefits far outweigh the effort.

Long-term benefits include:

• Improved reporting
• Stronger compliance
• Financial savings

For large enterprises, VAT reclaim is often second nature. But for smaller businesses, the time-consuming nature of the process can lead to inaction, leaving money unclaimed.

Here’s why reclaiming VAT in 2025 (especially on foreign expenses) should be a priority for any business looking to improve cash flow and reduce unnecessary costs.

What is VAT reclaim?

In a European context, VAT reclaim refers to the process of recovering Value Added Tax (VAT) paid on eligible business expenses.

Companies incur VAT on goods and services purchased in foreign jurisdictions. Businesses registered for VAT within the EU can reclaim VAT on foreign business expenses under the EU VAT Refund Directive.

While non-EU businesses may reclaim VAT under the 13th VAT Directive, depending on specific country agreements. Eligible expenses include:

• Business travel (hotels, meals, transport)
• Trade shows and conferences
• Supplier invoices for goods and services
• Fuel and vehicle-related expenses (for business use)

Given that 4-10% of a company’s total spend is typically eligible for VAT refunds, leaving that money on the table is an unnecessary financial drain.

4 reasons you should reclaim foreign VAT

Large companies that use VAT reclaim may find it self-evident to do so. However, the time and resource-consuming nature of VAT reclaim can cause smaller businesses to simply give up on it.

If you are among the latter, here are four reasons you should reconsider and start reclaiming foreign VAT: 

1. Visibility for data-driven decisions

Automated VAT reclaim can easily be integrated into your expense management solution. The spend data from your solution is regularly sent to the VAT reclaim partner of your choice who processes your claim.

With automation, your VAT reclaim process can be seamlessly integrated into your expense management solution, allowing for full visibility into your claims. The right system provides:

• Live reporting dashboards that track the status of your claims
• Advanced analytics that reveal VAT reclaim opportunities
• Gap analysis to increase compliance rates and maximise reclaimable amounts
  

With clear visibility into your VAT data, you can make strategic financial decisions based on real insights. And in uncertain times, improving your financial standing is worth its weight in gold.

The visibility comes from having a view not only on your travel and expense data within your expense solution, but also on your VAT data through dedicated dashboards and analytics.

2. Guaranteed compliance

With VAT rates ranging from 5% to 27% across 126 countries, and a labyrinth of rules and deadlines to navigate, reclaiming VAT manually can be overwhelming. But automation changes the game.

VAT reclaim specialists ensure compliance by:

• Aligning with in-country tax experts to stay updated on regulation changes
• Using AI-driven document validation to flag missing or incomplete information
• Automating data extraction and submission, reducing human error

Expense report compliance is also guaranteed with automated data and image collection. Artificial Intelligence and machine learning algorithms automate and check the receipts and invoices input by users. 

Your business cannot be avoiding AI-enhanced automation in 2025. Now, businesses can reduce processing time by up to 80%, ensuring a faster turnaround for VAT refunds. Whether you’re a startup or a multinational, automating VAT reclaim improves efficiency without adding administrative burden.

3. Save time with automation

The entire process, from data extraction to submission, is fully automated between your expense management solution and VAT reclaim partner.

This means your users aren’t spending a lot of time entering expense claims, and your accounting team isn’t poring over claims to properly categorise the spend, split the VAT and allocate everything to the correct G/L account.

With automation, the entire process from data extraction to submission, happens behind the scenes. This means:

1. Employees spend less time entering expense claims
2. Finance teams avoid the manual work of identifying VAT-eligible expenses
3. VAT reclaim specialists handle compliance, allowing your team to focus on the strategic task
4. Time savings scale with company size. Whether you’re a startup or a multinational, automating VAT reclaim improves efficiency without adding administrative burden.

The time your team isn’t spending on data submission and extraction is time they are spending on their value-added tasks. The time savings and benefits of automating VAT reclaim are proportional to spend and are therefore considerable whatever the company size.

Let your team and business benefit from increased profitability by automating your foreign VAT reclaim.

4. Minimal risks, optimal results

Data security is a major concern for businesses, and VAT reclaim providers operating in Europe adhere to strict GDPR standards. Many also hold certifications such as ISO 27001 for information security, ensuring your financial data remains protected.

Beyond security, reclaim experts or providers also ensure:

• Only accurate, compliant claims are filed, reducing the risk of penalties
• Missed opportunities are identified (e.g., reissuing invoices to meet VAT reclaim requirements)
• Businesses receive consulting support on best practices for maximising VAT recovery
• Only filing complete claims can drastically increase reclaim results.
• Furthermore, VAT reclaim agents may sometimes act as consultants, advising you on changes that can increase your reclaim potential.

What are you waiting for? 

A fully integrated travel and expense management solution like Mobilexpense simplifies VAT reclaim and ensures that every euro recovered goes straight back into your company accounts. This means more funding for strategic investments and strengthening your position in the market.