VAT Refund for Hotels & Travel Expenses in the EU
Business travel expenses can add up – Let’s say you and your team have a conference event to attend in Berlin, but you are operating in London; from flights, fuel and transport costs, to restaurant, entertainment and bar costs, to materials, other services and equipment, and that isn’t even considering the largest costs associated with Business trip, the Hotel and associated conference costs.
For the last 2 years consecutively, reported Business Travel accounted for over 15% of total tourism expenditure within the EU with growth continuing to rise rapidly. Potentially moving that figure closer to 20% in the near future, at an average of 523 EUR per trip, Business trips and their associated expenses are typically more than 2 times the average cost per night than for personal trips.
In recent years, Over 80% of Business Travel Expenses from EU member-state registered Organizations are from domestic and intra-EU travel. For 2017, it is expected that Business Travelers will spend nearly 200 Billion EUR. Germany and France, being the most popular countries for business traveler arrivals as well as having the largest departing traveler numbers in the EU, account collectively on average 48% of that annual spend for Europe.
Due to the anticipated complexity of recovering spent VAT on foreign Business expenses, billions of Euro’s of reclaimable VAT is lost annually by business – but it doesn’t have to be.
Hotels, Travel Expenses and VAT Reclaim – How Does it Work?
In terms of breakdown, accommodation in Hotels and Rented Accommodation accounts for the largest proportion of the total cost for a Business trip at nearly 40%, with transport costs consuming another 30%, leaving around 30% left of which is spent on associated costs ranging from leisure, to event costs or services, to supplies and equipment while abroad.
So how does VAT reclaim work? You and your team are now in Berlin on your Business trip and wrapping up from your conference, it’s time to settle the bill before returning to home. You have spent around 500 EUR per person on Hotels, Breakfasts, Restaurants and other Conference costs for 10 people and the bill totals 5.000 EUR exactly, around 600 EUR of that bill is VAT – 600 EUR of VAT you can reclaim.
The biggest complicator when it comes to VAT reclaim is compliancy related issues. Most EU Member States allow for VAT refunds on certain goods or service expenditures, like Hotels, while on business trips in their locale. Each country has various outlines for what you can claim back in terms of VAT spent. You collate your Business expenditure for the previous 12 months, or quarterly if preferred, and prepare claims for your VAT rebate based on invoices you have obtained.
Claims made must be submitted in accordance to local rules and are audited by the local Tax Authorities, however compliancy regulation can vary between countries. Non-EU companies are also entitled to claim VAT refunds on expenses incurred on business activities through a specific procedure. To find out overview specifics for each country and discover what can be reclaimed and where, take a look at our VAT Rules Map.
Tips & Tricks – things you need to know…
While the VAT refund process can sometimes seem confusing to digest, it really doesn’t have to be. There are a few simple steps you can take to make the VAT refund for Hotels and your other business trip expenses as smooth as possible and get a refund from your business VAT outlays – that’s where VAT4U can help.
- Preparation: familiarize yourself with what you can and can’t claim for, if you are claiming for your Hotel invoices, perhaps you also have simplified invoices and receipts from your Airport transfer or your breakfast that you can also include in your claim.
- Compliancy: On the topic of compliancy and processes around VAT reclaim, planning an appropriate compliant document acquisition system early makes the process seemingly smooth, ensuring your employees obtain compliant tax documents is the most helpful step.
- Auditing: assorting all your acquired documents in an audit process that you can find all required invoices when you are ready means you can prepare your claim as fast and efficiently as possible, perhaps categorize them for easier data management later.
- Country Awareness: Understand the basic principles of VAT reclaim in the countries you wish to claim in – look at the VAT4U Map to inform your planning for reclaim so you can be realistic with your expectations.
- Upload all of your compliant expenses that you wish to claim for to VAT4U, follow the necessary steps and get your VAT refunded!
Used and trusted by clients both in the EU and beyond – VAT4U is the first online tool to manage and automate your foreign VAT recovery, making it easier than ever before to reclaim your Overseas Business Travel expenses. Sign up now and see for yourself how easy it is to reclaim your VAT on foreign expenses.
If you have any questions about the VAT refund process in the European Union on your business expenses, our team will be happy to get you on the right track. You can either chat with us through the website chat messenger function, or contact us directly for more information or guidance.