International Expenses, VAT, and how Accounting structure is important

International travel is now routine for many businesses. Teams fly to trade shows, client meetings, supplier visits, conferences, site inspections, and operational reviews across Europe, the Middle East, Asia, etc. For some businesses, overseas travel is a one off, or rarely done, but for others, it is constant and part of how the business operates. Think of a business traveling to conferences, or someone going on client meeting.

What many companies do not realize is that international expenses often include recoverable foreign VAT. This VAT should not be a sunk cost by default. In many jurisdictions, it can actually be reclaimed, sometimes in full, sometimes partially, depending on the country, the type of expense, and the legal status of the business.

Yet year after year, businesses permanently lose recoverable VAT and not because they are ineligible, but because their accounting structure, expense processing as well as record keeping destroy the ability to reclaim it.

This article explains how international expenses interact with VAT, why eligibility depends on jurisdiction and reciprocity, how poor expense booking can permanently block recovery, and why businesses must get their accounting structure right before they even think about reclaiming VAT. Specialist solutions like VAT.claims can support recovery, but only when the underlying accounting allows it.

This article mostly focuses on International Travel, but note that there are many different scenarios for reclaiming VAT (depending on the country). Take a look at some of the examples under here.

What do we mean by International Expenses?

Most businesses think of international expenses as operational overhead. Flights, hotels, taxis, meals, conference fees, exhibition stands, car hire etc.. These costs are often processed quickly, approved internally, reimbursed and forgotten.

From an accounting perspective, however, international expenses are more complex than domestic US travel. Many overseas expenses include VAT or similar taxes that operate under entirely different rules from domestic sales tax or federal systems.

For example, hotel accommodation in Europe typically includes VAT at rates that vary by country. Conference fees often include VAT that may or may not be recoverable depending on the jurisdiction. Exhibition services, booth rentals and event access frequently carry VAT that is recoverable (but only if invoiced correctly). Car hire almost always includes VAT, but fuel VAT may be treated differently. Meals and entertainment can be partially recoverable in some countries and entirely blocked in others.

These are not "edge" cases. For businesses with regular international activity, foreign VAT can represent a meaningful annual amount. In some sectors, particularly travel, technology, professional services, and internationally focused SMEs, recoverable VAT can easily reach five or six figures over time.

The problem is that most businesses do not account for these expenses in a way that preserves VAT recovery rights.

Recoverable VAT depends on Jurisdiction and Reciprocity

Foreign VAT recovery is governed by local tax law and not just by the rules of the business’s home country. Each jurisdiction sets its own conditions for whether or not non resident businesses can reclaim VAT and under what circumstances.

One of the most misunderstood concepts is often what is know as reciprocity. Many countries only allow VAT refunds to businesses established in countries that grant reciprocal rights. So If your home country does not allow similar refunds to businesses from that jurisdiction, recovery may be blocked entirely, regardless of how good your invoices are. This is sometimes the case with the US, who does not have a tax structure similat to Value Added Tax (Sales Tax is often not considered the same).

The European Union operates refund schemes for non EU businesses, but eligibility depends on both reciprocity and the nature of the expenses. Some countries are generous but others are more restrictive. For example, some allow hotel VAT recovery. Others do not. Some allow conference VAT recovery. Others block it entirely.

Outside the EU, recovery regimes vary even more widely. Some countries offer structured refund systems. Others offer none at all. Some allow recovery only through local registration, which may not be commercially viable. Others impose minimum thresholds that make small claims pointless.

What matters from an accounting perspective that either the business is eligible under local law, or it is not. No amount of retrospective restructuring or explanation will override statutory rules.

This is why accounting teams must understand where the business is spending money and what VAT regimes apply before expenses are booked, and not years later when someone notices VAT on hotel bills.

Why poor expense booking can destroy VAT Recovery

The single biggest reason businesses lose recoverable foreign VAT is poor expense booking. Foreign VAT recovery requires specific documentation. Things like proper invoices issued to the correct legal entity. Mandatory invoice data such as supplier details, VAT numbers, dates, VAT amounts, and descriptions that meet local requirements. Proof of payment that aligns with the invoice. Correct currency handling. Clear linkage between the expense and the business activity.

Common accounting failures include booking gross amounts without separating VAT, losing original invoices, accepting receipts that are not valid tax invoices, reimbursing employees without capturing supplier level documentation, posting expenses to suspense accounts that are later cleared without detail, and aggregating multiple expenses into a single journal entry.

Once this happens, VAT recovery is sadly often permanently lost. VAT authorities do not accept reconstructed invoices. They do not accept bank statements in place of tax invoices or explanations instead of compliant documentation. If you are on time, you might have the opportunity to ask the supplier to amend the invoice, but this is not guaranteed.

Even worse, many accounting systems overwrite or discard VAT detail when expenses are reimbursed through payroll or generic expense modules that are not configured for multi jurisdiction VAT handling, and by the time someone asks whether VAT can be reclaimed, the data is already unusable.

VAT Reclaim is an Accounting process as well as a Tax process

This is where many businesses misunderstand VAT recovery. They treat it as a tax filing exercise rather than a data integrity problem.

VAT reclaim specialists can only work with the data they are given. If invoices are missing, incomplete, issued to the wrong entity, or posted incorrectly, no reclaim submission can fix that. The tax authority will simply reject the claim.

Accounting structure determines whether VAT recovery is even possible. This includes how expenses flow through the general ledger, how entities are defined, how cost centers are used, how expense policies are written, and how approval workflows operate.

For example, if international expenses are routinely charged to personal cards and reimbursed without invoice validation, VAT recovery is almost always compromised. If expenses are posted to a generic travel account without VAT separation, identifying reclaimable amounts later becomes costly or impossible. If multiple legal entities share expenses without clear recharge mechanisms, VAT eligibility can be destroyed - VAT recovery starts at the point of purchase, not at the point of reclaim.

Legal Entity Structure matters more than most Businesses think

Another common issue is entity mismatch. VAT recovery is only available to the legal entity named on the invoice. If invoices are issued to the wrong entity, recovery is usually blocked, unless you are able to ask the supplier to change.

This becomes a major issue for groups with multiple entities, international subsidiaries, or shared services models. Employees often travel on behalf of one entity but use cards or booking systems linked to another. Invoices may be issued to parent companies instead of operating entities. Conferences may issue invoices to individuals rather than companies. Likewise, invoices are sometimes issued in the employee's name, and not in the name of the company.

From an accounting perspective, this creates problems. VAT authorities do not allow claims where the claimant is not the named recipient of the supply. Internal recharges do not fix this. Intercompany journals do not change the legal reality of the invoice.

Proper accounting structure means aligning travel policies, booking tools, card programs, and expense workflows with the correct legal entities.

Expense Categorization

Many businesses treat expense categorization as an administrative task, but from a VAT perspective, it is critical, as different types of expenses have different VAT treatment. Hotel accommodation may be recoverable in some countries but not others. Meals may be partially recoverable or fully blocked. Conference fees may be recoverable if access is separated from hospitality. Exhibition services may require specific invoice wording to qualify.

If expenses are lumped together under generic categories like travel or miscellaneous, VAT recovery becomes extremely difficult. VAT reclaim requires expense level analysis, not aggregated totals.

Accounting systems must be configured to capture expense type, location, supplier, and VAT treatment. This is not over engineering. It is basic hygiene for businesses with regular international spend.

Timing can also impact Claims

VAT recovery is subject to deadlines. Many jurisdictions impose strict time limits for submitting refund claims. If expenses are not identified and processed in time, recovery rights expire, and it is not possible to file after missing the deadline (unlike potentially with other tax forms)

Accounting practices such as late postings, backdated journals, delayed expense approvals and prolonged period locks can all contribute to missed deadlines. By the time VAT is identified, the window may already be closed.

This is another reason VAT recovery cannot be bolted on later. It must be embedded into the monthly accounting process and with clear timelines and accountability.

Why Businesses assume they are not eligible when they often are

At Antravia, we find that a surprising number of businesses assume foreign VAT recovery is not possible and never investigate further. Sometimes this assumption is correct. Often it is not.

Eligibility varies by country and by expense type. A business may be blocked from recovering VAT in one jurisdiction but fully eligible in another. It may be blocked for meals but eligible for accommodation. It may be ineligible directly but able to recover through structured registration.

Without proper accounting data, however, these opportunities remain invisible. If expenses are not tracked by country and category, eligibility cannot even be assessed.

This is where many businesses lose money and not through denial, but through ignorance created by poor accounting structure.

VAT.claims as a specialist

Specialist VAT recovery platforms like Antravia's VAT.claims exist because VAT reclaim is complex, jurisdiction specific, and time consuming. They play a critical role in navigating local rules, submitting claims, handling correspondence, and maximizing recovery where possible.

However, VAT.claims and similar services are not magic solutions. They rely entirely on the quality of the underlying accounting data. When invoices are compliant, properly booked, and clearly linked to eligible entities, recovery can be efficient and worthwhile. When they are not, claims fail or never get submitted.

The most commercially effective approach is to treat VAT.claims as a specialist execution layer, not as a substitute for proper accounting. Businesses that do this recover more VAT, with less friction, and lower overall cost.

Why this filters serious Businesses from trivial Claims

There is a reason many VAT recovery providers struggle with low value and low quality claims. Businesses that do not invest in proper accounting structure tend to submit poor documentation, expect unrealistic outcomes, and generate high administrative overhead for minimal recovery.

By contrast, businesses with structured accounting, disciplined expense processing, and regular international spend are ideal candidates for VAT recovery. They generate meaningful claims, understand limitations, and value professional support.

This is why an accounting first approach is commercially smart. It attracts businesses that already operate internationally and filters out those with ad hoc expenses and unrealistic expectations.

What Businesses should do before thinking about VAT Reclaim

Before engaging any VAT recovery service, businesses should ask themselves a few hard questions. For example:

Do we know how much we spend internationally by country and by category? Do we capture compliant invoices for those expenses? Are invoices issued to the correct legal entity? Do our expense systems retain VAT detail? Do we review expenses within reclaim deadlines? Do our accounting teams understand foreign VAT basics?

If the answer to these questions is no, VAT recovery will be limited regardless of the provider used.

Accounting Structure as a strategic Asset

Good accounting structure does more than enable VAT recovery. It improves cost visibility, strengthens controls, supports compliance, and reduces risk. VAT recovery is simply one of the most tangible financial benefits of getting it right.

Businesses that treat accounting as a strategic function rather than a compliance obligation consistently outperform those that do not. They lose less money to leakage, they make better decisions, and they are more resilient when regulations change.

International expenses are a perfect example. They look small in isolation, but over time, the impact of poor structure compounds.

Conclusion

Foreign VAT recovery is not a loophole or a bonus. It is a legitimate right for eligible businesses. But it is a right that can be lost silently through poor accounting practices.

VAT reclaim starts with how expenses are booked, not with how claims are filed. Jurisdiction rules matter. Reciprocity matters. Documentation matters. Entity alignment matters. Timing matters.

Specialist services like VAT.claims can add significant value, but only when the accounting foundation is sound.

If your business spends money overseas and does not know whether VAT is being lost, the question is not whether you should reclaim VAT. The question is whether your accounting structure is quietly costing you money every month.

See our specialist pages
Global VAT Reclaim - Recover the Tax you’ve already paid abroad
UK VAT Reclaim for U.S. and Global Businesses
EU VAT Reclaim for U.S. and Global Businesses
UAE VAT Reclaim for U.S. and Global Businesses
International VAT Reclaim

Disclaimer:
Content published by Antravia is provided for informational purposes only and reflects research, industry analysis, and our professional perspective. It does not constitute legal, tax, or accounting advice. Regulations vary by jurisdiction, and individual circumstances differ. Readers should seek advice from a qualified professional before making decisions that could affect their business.

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