How to reclaim VAT on business travel expenses

With reports that businesses are losing up to 12% in revenue due to unclaimed VAT, it’s more important than ever to understand how the VAT reclaim process works. Value added tax, or VAT, is often added to travel-related goods and services, from hotels to meals. And while businesses are usually eligible to claim this added tax back on their VAT returns, many fail to do so, whether it’s due to missing documentation or confusion about country-specific tax rules. 

Though reclaiming VAT can sometimes be time-consuming, it offers significant savings for businesses of all sizes. We’ll take the mystery out of the process in this blog, explaining how the process works along with the eligibility criteria you’ll need to meet for a successful claim. 

What is VAT, and how does it work?

Over 170 countries currently use the VAT system. Value-added tax is added to consumer goods and services, with rates different by country. In the UK, the standard VAT rate is 20%, while in the EU it is set at a minimum of 15%. 

While sales tax is paid solely by the retail customer, VAT is spread throughout the supply chain to share the burden. And when paid as part of your company’s business travel expenses, it can often be claimed back.

What does it mean to reclaim VAT?

VAT reclaim describes the process of recovering VAT paid by businesses on work-related goods and services. In the case of business travel, this would include expenses such as transport, accommodation, and meals incurred during a work trip. 

Reclaiming VAT is part of the business travel and expense management process, involving everything from collecting travel receipts and VAT invoices to submitting claims to your country’s tax authority. 

In the UK, HMRC rules state that all businesses with a turnover exceeding £90,000 must register for VAT. The threshold is far lower in many European countries – for example, as of 2025 it’s €25,000 in Belgium, €20,000 in the Netherlands, and €7,000 in Sweden. All Chinese businesses are required to register for VAT, either as a general taxpayer (with turnover greater than ¥5 million) or small-scale taxpayer (with turnover less than ¥5 million). Mandatory registration thresholds vary by state in India, though any business can voluntarily register. 

It’s important to note that not all countries use the VAT system, though there is often an equivalent.. Australia uses a Goods and Services Tax (GST) and Japan charges a 10% Consumption Tax. In the USA, sales tax replaces VAT as the levy paid on goods and services. That means US-based businesses don’t need to register for VAT, but VAT paid by a US business traveller during an international business trip can sometimes be reclaimed from the host country. 

How much VAT can businesses claim back?

In countries where businesses are VAT-registered, this depends on how much your business owes. VAT paid to the government is usually equal to the difference between VAT paid to other businesses, and VAT charged to customers. If you’re a VAT-registered business, that means you can use these claims to reduce the amount owed to the government or receive a VAT refund when the amount paid exceeds the amount owed.

Which business travel expenses are eligible for VAT reclaim?

When it comes to claiming back VAT, the rules will vary by country so it’s important to familiarise yourself with local laws and speak to an accountant. 

Within countries that use the VAT system, in some cases only registered businesses will be eligible for a reclaim. You’ll also only be able to reclaim VAT on work-related goods and services. This means that travel expenses must be incurred serving company interests. 

Examples of eligible business travel expenses would include VAT paid on: 

• Transport
• Fuel and mileage
• Meals
• Accommodation

However, there are some caveats to consider. 

Reclaiming VAT on airfare and ground transportation

Any form of transportation built to carry at least ten people is zero-rated, meaning you don’t pay VAT on most public transport and trains. You also won’t pay VAT on airfare unless taking a small charter flight or helicopter carrying under ten passengers. Of course, without paying VAT, there’s nothing to reclaim. 

Reclaiming VAT on Mileage

To claim VAT on mileage, it’s important to distinguish between personal travel and business trips. An employee’s regular commute won’t qualify, but mileage paid for as part of corporate car rental abroad will. 

Reclaiming VAT on meals

The rules surrounding eligibility for meals as an allowable travel expense will vary widely by country. Yet in most cases, most meals paid for as part of a business trip will be eligible for VAT reclaim, with the provision of clear receipts.  

Reclaiming VAT on entertainment

According to HMRC, businesses can’t claim back VAT on things like theatre or sports tickets, even when these were purchased as part of entertaining clients on a work trip.

What is the process of VAT reclaim and how to get started? 

Documentation is at the heart of the VAT reclaim process. Finance managers need to prove how much VAT was paid by travelling employees before filing any claims for reimbursement, and each country’s tax authority has its own rules. 

For example, the UK’s HMRC states that any VAT reclaims require:

• An invoice stating the amount of VAT paid for each expense
• Bills must be addressed to the company, not individual employees

Here’s a step-by-step breakdown for how to reclaim VAT. 

Step 1: Collect necessary documentation

To reclaim VAT, finance teams first need to prove that it’s been paid on relevant business travel expenses. This is done with VAT receipts and invoices showing how much was paid.

• Acceptable invoices must be the original copy, rather than proforma invoices or copies
• Documents must often show the legal name and address of your company, rather than a department or individual employee
• When invoices are multi-page, all pages must be submitted

There’s no need to store paper copies in most cases. Digital files are acceptable provided they show the expense details and VAT amount. 

However, keep in mind that each country has its own regulations, which change over time. Here are a few examples:

• In the EU, simplified VAT invoices are acceptable for business trip expenses under €150, but in Germany this threshold goes up to €250
• In the UK, businesses aren’t required to keep receipts for individual purchases under £25 
• In Italy, invoices must show both the company name and employee name, with proof of payment listed

Step 2: Fill out VAT returns for each country

After compiling documents, finance administrators then need to fill out and submit an online VAT return for each tax authority. Depending on the nature of the work trip, this will often be in the country your business is based in. But for international business travel, you may need to file a separate claim in each host country where VAT was paid. 

For example, travellers from non-EU countries that are charged VAT on business activities within an EU country may be entitled to have VAT refunded by that country. Imagine that representatives from a Switzerland-based business attend a conference in France and are charged French VAT on their hotel bill. The claim would need to be filed with the French tax authority. 

Step 3: Receive refunds from government tax authorities

Once submitted according to local rules, the tax authority will review your company’s claim and process the refund. It’s important to track and store all VAT invoices and receipts as part of your business travel expense management, to ensure you’ve reclaimed all VAT that’s eligible.

Challenges you might encounter with VAT reclaim

The primary challenge of back claiming VAT is the variation in legislation across different countries. Not only does each country have a different VAT rate, but it also creates its own set of rules regarding eligibility, documentation, and refund deadlines, and these change frequently. 

Along with this comes the need for extensive documentation, which creates an administrative burden on businesses. You’ll need an organised system to track travel expenses, retain receipts, and submit VAT reclaim forms by each country’s submission deadline. 

Automated expense management software, combined with receipt scanning apps, ensures that business travel payments and reimbursements are managed efficiently. 

Best practices to improve your VAT reclaim success rate

Automating and standardising your business’s travel expense management workflow is imperative when reclaiming VAT. But you’ll also need to clearly communicate VAT procedures in your company’s travel policy. That way, business travellers will know the type of receipts they need to save, and where to submit them.  

Here are a few best practices to help streamline the VAT reclaim process. 

• Maintain detailed records: Store and organise all VAT receipts and original invoices for a minimum of four years
• Verify records for accuracy: Incorrect formatting and missing details could mean your VAT claim is rejected. Always verify receipts to ensure they’re correct and clearly show the VAT paid
• Promote expense tracking apps: With apps like Expensify and Wave, business travellers can scan and submit receipts to a central travel management solution for real-time processing and better visibility 
• Automate your processes: Use spend management software to save time on manual expense reporting and reclaim processing 
• Keep up to date with VAT rules: Stay informed not only about VAT rules in your own country, but also perform research as part of pre-trip planning to find out which expenses are eligible for a reclaim
• Communicate your policy: As part of your business travel expense policy, create clear rules around VAT invoice submission. Take the time to educate employees about eligible travel expenses, the types of invoices required, timelines for submission, and supporting documentation. Then, put this in writing for future reference, updating with applicable changes to VAT rules. 

How Booking.com for Business can help

Successfully claiming back VAT requires system-wide management of your company’s business travel processes. And with an all-in-one solution like Booking.com for Business, you’ll be able to book business flights, accommodation, and rental cars in one place.

While a streamlined booking process is vital for organised travel expense management, you’ll also need to find ways to stay within the approved budget. With Booking.com for Business, you’ll also be able to integrate your business travel policy to set up automated approval workflows, helping improve compliance when it comes to expense management. Wondering just how much your business can save by using these tools? Our Travel Savings Calculator asks seven simple questions to reveal the amount you could save on corporate travel spend. 

The bottom line: Save money on business travel with VAT reclaims 

With VAT rates reaching 25%, neglecting to reclaim them can significantly inflate the cost of business travel. While reclaiming VAT may seem a burdensome process at first glance, a robust travel policy combined with automated digital tools will help streamline the process. 

Booking.com for Business partners with trusted tools like Expensify to seamlessly integrate expense tracking and invoice submission into your corporate travel management platform. With greater visibility over business travel expenditure, you’ll be better placed to manage VAT returns and maximise revenue.