Ensuring you are compliant with global VAT requirements puts a lot of pressure on your travel, financial and IT departments. This is due to the constant changes in VAT regulations around the world, and the need for your organisation to keep up with these changes not only in your country or countries of operation, but also in those your employees visit.
Issues with VAT compliance can have severe impacts on multiple departments within your organisation, not just Finance. Both the direct and indirect implications of a breach in VAT compliance should not be ignored.
With the right technology and partners, achieving VAT compliance becomes carefree, allowing you to focus on what matters - your business.
The complexities of VAT reporting mean that the risk of errors, unknowing or otherwise, is high. Pressured by workloads and deadlines, your financial team may not register inaccuracies in VAT data on expenses or assume the approver has already performed a check. Receipts may also not be looked at closely or at all. All of which could lead you to submitting fraudulent VAT statements due to incorrect data in your reports and ultimately being penalised.
The role of an automated expense management tool in VAT compliance is to make sure that both business and regulatory policies are being adhered to, in the least hands-on way possible. Optical Character Recognition (OCR) and integrated card transactions guarantee that the VAT data captured in your solution is accurate. And thanks to various policy and expense report compliance checks performed automatically, it is also compliant.
With the correct tool and the right recovery partner, you can be sure that VAT calculations are correctly made and that your organisation is compliant with all the regulations which apply.
One of the reasons many companies tend to forego foreign VAT recovery is the inherent intricacy of the recovery process. Each country has different forms and deadlines, making VAT recovery a full-time job that organisations, especially smaller ones, often can't justify the expense for. And unfortunately, claiming ignorance does not clear you of the responsibility of being compliant.
To eliminate the risk posed by submitting incorrect or non-compliant data, one easy solution is to enlist the help of an expense management solution with integrated VAT recovery.
Your expense management solution makes available to you correct and compliant VAT data, and the VAT recovery agency ensures that your claims and complete and submitted on time. All of this is assured, no matter the country or region and how frequently the regulations may change. Your VAT compliance with both general expense regulations and VAT regulations is guaranteed around the world and efficiencies are eliminated with the help of automation.
Between the delays inherent to any corporate expense process and the complexities linked to VAT recovery, the probability of both making errors and missing deadlines is high in any organisation. Missing fiscal deadlines is almost always a recipe for further financial trouble and is best avoided.
In the case of VAT recovery, doing it wrong puts you doubly at risk: it exposes you to fines while also taking away that extra cash from the reclaim, thus reducing your profitability.
Thankfully, this scenario is easily avoided with a clear policy, automated pre-approval and approval processes and by partnering with a recovery agent for VAT claims. Putting these elements in place will turn expenses from a cost into a source of savings while barely lifting a finger.
Another reality of VAT-related processes is that they require keeping up to date with ever-changing regulations. This is true if you operate in a single country, and increasingly so the more countries you do business with and in.
Looking at continental Europe, rates range from 7.7% in Switzerland to 27% in Hungary, with an average of 21.3% across European countries. Changes can be made to these rates annually, or following extraordinary circumstances such as the pandemic.
This makes ensuring your VAT data is accurate a time-consuming job for your financial department, and one it doesn't necessarily have the resources to undertake, leaving cash on the proverbial table.
If this is you, consider an expense management solution with integrated VAT compliance and recovery services. Automation from OCR and imported credit card transactions all but guarantee that the data entered into your system is correct. Using scanning technology also makes the receipt and invoice images readily available for accounting and recovery purposes.
And, just as importantly, your expense and tax partners have the knowledge and resources to keep up to date with regulatory changes. This frees you from the burden of poring over tax documentation and gives you the peace of mind you need regarding your VAT compliance.
Your expense management solution should do more than "just" manage expenses. It should help you capture correct data, facilitate foreign VAT recovery, provide you with peace of mind regarding deadlines and lighten the load on your employees.
A trustworthy partner will do all this, and more, so look for a vendor that will help you improve your processes, rather than working around them.