If you’ve ever questioned if recovering VAT on travel tickets is worth the effort for your business, the answer is an unequivocal YES. Although any firm has the right to do so, many do not, resulting in around 5 billion in unrecovered VAT in Europe each year. While it is true that recovering VAT in several jurisdictions can be time-consuming, there are some techniques that will make your life simpler.
1. Make sure your ticket information is complete
This is one of the most important conditions for recovering VAT. “Tickets” (aka simplified invoices) as such do not include all necessary information for tax administrations, since they do not provide the name of the purchaser of the goods or services that appear in the document. Such information is vital to convincing the administration that the deduction is legitimate, otherwise, your company may even be subject to sanctions.
To solve this problem you can simply fill out the missing information. If the simplified invoices include the customer’s tax identification number, the address of the recipient and the VAT amount, the administration will proceed with the deduction.
It should be noted that this information can be added in different ways. One option is to manually write them on the simplified invoice – a simple, but a time-consuming solution. Another option is that the service provider or seller of the good does this very same thing for you.
However, the Tax Office could doubt the trustworthiness of the information and falsifications would indeed be very simple in this way. In this case, the Office could even request a calligraphic proof with which to carry out the appropriate searches.
These complexities have generated a third way: it is possible to use a third part to complete the invoice, upon authorization of the company that issued the ticket.
2. Request a complete invoice
The easiest way to justify cost recovery is to provide a complete invoice. They have all the necessary information. To obtain it, all you must do is request the professional or businessman who has provided the service or sold a product the complete invoice. This way, the simplified invoice is replaced.
In addition, it is possible to provide several tickets in the same summary invoice, but they must refer to activities carried out in the same natural month. Time is very important for these actions. If you have a ticket issued a year ago, it is typically not possible to request the full invoice. This doesn’t seem too unreasonable, as the principle of prescription limits time in order to avoid fraud.
Also, it should be remembered that tickets or invoices must be related to the business activity. It is not possible to claim a tax deduction for drinking coffee or eating in a restaurant for personal reasons. In these cases, even if a complete invoice is provided, it will not be valid.
3. Request an amended invoice
In order to recover VAT from a ticket from previous years, it is necessary to replace it with an amended invoice containing all the data and details required by the tax administration, with a maximum term of between 2 and 6 years depending on the country.
Converting expense tickets into invoices with deductible VAT is not a quick and easy process. In fact, it can be tedious, complex, and costly for any organization without the necessary knowledge and resources.
First of all, you have to contact the supplier, send him the original receipt justifying the expense, either on paper or a digitalized image with software approved by the Tax Agency, and wait for the amended invoice to arrive. Next, you must check that the data is correct and register it in your ERP taking into account that you must maintain traceability with the original ticket. In this case, it is better to count on a specialized company.
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Once a complete or amended invoice has been obtained, VAT can be recovered normally.
In order to avoid problems during the process, it is important to conserve your tickets as best as possible, services such as the one offered by Rydoo allow you to keep and manage them in digital format without any risk. It is also valuable to have companies specializing in recovering VAT on T&E tickets such as 60dias, which already have the experience and infrastructure necessary to do it quickly and without problems.