The $20 Billion Oversight: How U.S. Companies Can Reclaim Foreign VAT in 2025 and 2026

Most U.S. companies sending employees overseas for trade shows, client meetings, training, or conferences are overpaying taxes and often without realizing it. In many major markets, VAT on business travel ranges from 20 percent to 27 percent, meaning a company with a $1 million international travel budget may be losing $150,000 to $250,000 every year in recoverable tax.

The opportunity is substantial. Industry estimates suggest that U.S. businesses collectively leave over $20 billion in refundable foreign VAT, GST, and consumption taxes unclaimed annually. Despite this, more than two-thirds of U.S. finance teams do not feel confident navigating the reclaim systems.

A new guide published by VAT.travel — The Ultimate VAT Refund Guide for US & Global Businesses — provides one of the clearest explanations of how the rules work and where the real opportunities lie. The summary below distills the essential points U.S. businesses need to understand in 2025.

Why is this important?

VAT is a material cost in every major international business destination:

• Europe: 20–27%

• Japan: 10%

• Canada & Gulf States: 5–15%

If none of this is reclaimed, it becomes avoidable leakage and cash paid to foreign tax authorities that should remain on your balance sheet.

The shift toward real-time digital invoicing in the EU also raises the stakes. Errors that might once have been overlooked are now automatically flagged by revenue authorities. Companies that do not modernize their documentation processes risk losing eligibility altogether.

The Three Refund Systems U.S. Companies Can Use

Below is a practical overview of the main regions in which U.S. businesses can legitimately recover VAT in 2025.

1. European Union – 13th Directive (the most restrictive)

Legal basis: Council Directive 86/560/EEC
Process: Non-EU companies submit claims directly to each Member State
Deadline: June 30, 2026 for all 2025 expenses

2025 reality for U.S. claimants

Because the United States has no federal VAT, many EU countries assess claims based on reciprocity. The result is uneven eligibility:

• More likely to pay: Germany, Netherlands, Ireland

• Commonly reject U.S. claims: France, Spain, Italy, and several Nordic jurisdictions

Even in “friendly” countries, documentation must be precise.

2. United Kingdom – VAT Notice 723A (the most accessible)

The UK remains one of the most practical refund jurisdictions for U.S. companies.

Key advantages:

• No reciprocity requirement

• Simplified documentation (invoices under £250 require fewer details)

• High success rates when rules are followed

Claim period: July 1 – June 30
Submission deadline: December 31

For most U.S. companies, the UK offers the highest refund potential and the lowest administrative friction.

3. The Rest of the World – High-Value Opportunities

Canada

The Foreign Convention and Tour Incentive Program (FCTIP) provides significant rebates for conferences and events where most attendees are non-residents.
Typical recoveries include:

• 100% on convention facilities

• 50% on food and beverage

• Refunds for imported goods and exhibition materials

Japan

There is no standalone refund mechanism for foreign businesses. To recover Japanese Consumption Tax, a business must voluntarily register for JCT and even if turnover is below the ¥10 million threshold. Most companies do not do this and permanently absorb the 10 percent.

Norway & Iceland

Both are business-friendly and do not apply reciprocity restrictions to U.S. entities.

Switzerland, South Korea, UAE, New Zealand

All operate non-resident refund schemes, but each has distinct rules, documentation requirements, and strict annual deadlines. Success depends heavily on invoice quality and local compliance.

Why 70% of Claims Fail

European Commission and national revenue authority data show that most rejected claims fall into three categories:

1. Incorrect or incomplete invoices

The supplier charged the wrong VAT rate or failed to display mandatory details.

2. Insufficient proof the expense was for business purposes

Lack of documented business justification, missing attendee information, or vague descriptions.

3. Expense categories that are simply not recoverable

Entertainment, passenger transport, and certain types of vehicle hire are blocked in many countries.

Practical fix:
Modern expense platforms that collect full invoice images, extract data automatically, and require a business purpose at the point of spend dramatically increase success rates.

2025–2030: A New Era of Digital Enforcement

The EU’s VAT in the Digital Age (ViDA) initiative marks the transition toward mandatory structured e-invoicing. See also more here.
Key points:

• By 2030, all intra-EU B2B invoices must be electronic and real-time

• Paper receipts are being phased out

• Countries like Italy, Poland, Spain, and Belgium are already introducing national e-invoice mandates

• Systems that rely on scans or PDFs will not meet future requirements

This shift makes accurate, structured invoice data essential for reclaiming VAT.

Should you manage this internally or outsource?

The rules are complex and vary by jurisdiction. Managing 13th Directive, UK 723A, FCTIP, and other schemes internally requires:

• multilingual document processing

• country-specific VAT interpretation

• multiple tax portals

• strict deadline management

• high-quality invoice validation

Outsourced specialists typically charge 10–25% of the recovered VAT, making the service cost-neutral. Most U.S. companies that achieve consistent annual recoveries use professional providers rather than relying on in-house teams.

Three Practical Steps to Take Now

1. Read the full 2025 guide

Read our full VAT.claims guides as well as the detailed, free resource:
https://vat.travel/guide-to-vat-reclaim-for-us-and-global-businesses

2. Quantify last year’s opportunity

Take your 2024 international travel spend and multiply by 20 percent as a rough estimate of potential refund value.

3. Decide whether to build or outsource your process before June 30, 2026

June 30 is the critical EU deadline. Missing it means losing all entitlement to 2025 refunds.

Final Antravia Thought

More than $20 billion of refundable VAT is left unclaimed each year and most of it by U.S. businesses that assume the process is too complex or not worth the effort. With the right documentation and the right partners, that cash can be recovered.

If your team has major events or international travel planned for 2026, feel free to share the destination as different countries offer very different recovery rates, and a little planning upfront can lead to a meaningful refund later.

References

1. The Ultimate VAT Refund Guide for US & Global Businesses

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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