Updated: Nov 3, 2021
A report issued by the European Parliament highlights the complexity of the VAT reclaim process
Analysing World Bank Data for 2020, the report says that on average it takes a business nine hours to comply with the VAT refund process. The data shows that it takes 17 weeks to obtain a VAT refund.
According to the data, Italy and Romania are the EU Member States in which complying with a VAT refund takes the longest (approximately 42 and 22 hours, respectively).
Moreover, “Italy, Cyprus and Greece record the highest number of weeks to obtain a VAT refund (around 62, 43 and 31 weeks respectively).”
Aimed at finding ‘fair and simpler taxation’, the report investigates regulatory changes to make VAT compliance easier and more cost effective.
The cost of VAT compliance
VAT recovery is administratively intensive. However, even simply complying with VAT basic VAT obligations can be time-consuming and costly.
Looking at the burden of VAT compliance, the report emphasises that the cost of complying with VAT regulations is, on average, higher than tax compliance on average. For instance, “VAT data collection costs represent 57% of tax compliance costs on average, against 44% for corporate income tax.”
The report found the challenge of VAT compliance and recovery fell disproportionately on SMEs. Smaller businesses generally lack the specialised resources to manage VAT.
Outsource your VAT recovery and save
Given the complexity and administrative demands of claiming back VAT, many companies fail to reclaim all the VAT to which they are entitled. In practice, that means businesses are neglecting significant opportunities to reduce costs and improve cash flow.
For that reason, many companies choose to outsource their VAT recovery to VAT IT. It’s the effective and efficient way to maximise reclaim opportunities and secure significant savings. It’s a complete technology-driven VAT reclaim solution that produces direct savings.
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Author: re:TRADE, powered by VAT IT - Strategic Partners of GMCC. For any queries relating to post-Brexit trade, your supply chain or how to reclaim Import VAT and Brexit Solutions, email our team for an introduction.