Value Added Tax (VAT) recovery as Reverse charge Vat in Europe for Travel and expense.

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Posted on by Natalia Aquarius

Hi all,

Could you help with following question?

if one person from Germany company was in business trip in France and have expenses with VAT, can be cases, when Vat recovery is booked as Vat reverce charge?

How Vat recovery is booked in Europe?

Can it be real Vat recovery from France to Germany in above described case?

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Answers (1)

André Arnaud de Cal... 300,896 Super User 2025 Season 2 on at

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Hi Anna,

What exactly do you mean with "VAT recovery" here?

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Natalia Aquarius 79 on at

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Hi Andre,

I mean that process.

"Companies doing business abroad often incur foreign VAT on invoices. These businesses cannot recover this VAT through their own domestic returns. For example, a Germany company receiving hotel bills for staff visiting Spanish cannot reclaim the Spanish VAT through their Germany VAT return. VAT Recovery is the process of reclaiming this foreign VAT back."

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Verified answer

Ludwig Reinhard Microsoft Employee on at

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Hello Anna,

Germany has - as many other countries - a formal process for that.

That is, when I as a German citizen come home from a business trip in France and see some French tax on for example the French hotel bill then I have to post the complete amount as business expense. Also the French tax!

If you want then you can get a refund of the French tax paid.

Doing that is, however, a lengthy and very formal process and sometimes not the full tax is refunded.

You can find some information on that refunding procedure on the EU websites.

ec.europa.eu/.../guide-vat-refund-visitors-eu_en

My recommendation would be not doing that unless the tax amount is really large so that it is worth the time and effort you have to spend getting the foreign tax paid back.

Best regards,

Ludwig

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Natalia Aquarius 79 on at

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Thanks for you answer Ludwig.

so i should set the non deductible tax for vat recovery. And then send these tax for recovery?

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Natalia Aquarius 79 on at

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Thanks for you answer, Ludwig.

so i should set the non deductible tax for travel expenses for vat recovery? And then send these tax for recovery?

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André Arnaud de Cal... 300,896 Super User 2025 Season 2 on at

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Hi Anna,

I do understand the scenario now. Like Ludwig mentioned, the refunding of French VAT is cumbersome. If you don't claim this VAT back, then you have to post the full amount as expense and no VAT is included.

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Natalia Aquarius 79 on at

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hi Andre,

thanks for your answer.

so i should set the non deductible tax for travel expenses or to post amount without taxif i do not want to make vat recovery ?

if i want to make vat recovery i should set deductible tax for travel expenses, but use specific tax general ledger posting for this code?

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Suggested answer

Ludwig Reinhard Microsoft Employee on at

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Hello Anna,

I would make it 'easy' and post 100% of the costs as an expense on a P&L account without any tax. Why would you make an extra non-deductible tax posting that is treated as an expense anyway? Just makes the system full of unnecessary tax transactions.

Best regards,

Ludwig

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Natalia Aquarius 79 on at

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Hi Ludwig,

thanks for answer.

but if I need to make vat recovery i can notnot use non deductable functionality of sales tax code?

is it correct,that in this case this expense report does not appear in this form?

so in that case i should use specific sales tax code with specific ledger posting?

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