How are VAT or GST amounts treated in reimbursement calculations?

Short answer

VAT and GST amounts are included in the total reimbursement paid to employees. Whether the business can claim input tax credits on the tax portion depends on jurisdictional rules, the business’s registration and taxable activity status, the expense type, and proper documentation.

On Ramp, reimbursements capture the full amount employees paid including VAT or GST, and the platform stores receipt documentation and categorization to support your accounting team's review of tax-eligible expenses during tax filing.

How VAT and GST work in reimbursements

When an employee incurs a business expense in a VAT or GST jurisdiction, they pay the full amount including tax. Your company reimburses the complete amount, then—if eligible under local rules—claims the tax portion as an input tax credit when filing returns, effectively reducing your net tax liability.

Example: An employee pays $1,100 for a business expense that includes $100 in GST (10% rate). You reimburse the full $1,100. If your business is registered for GST, makes taxable supplies, and the expense qualifies for input tax credits under local rules, you claim the $100 as an input tax credit when filing your GST return, making your net cost $1,000.

Requirements to claim input tax credits

To recover VAT or GST from reimbursed expenses, you must meet conditions that vary by jurisdiction but typically include:

Valid tax invoice or receipt — The documentation must meet your jurisdiction's requirements, which may include the vendor's tax registration number, transaction date, description of goods or services, and tax amount. Many jurisdictions allow simplified invoices below certain thresholds with reduced information requirements. In some cases, the invoice must be issued to the business entity, not the employee personally.
Business purpose — The expense must relate to your taxable business activities, not personal use or exempt supplies
Proper documentation — You must retain receipts that meet your jurisdiction's authenticity and integrity requirements (digital copies are acceptable in many jurisdictions if they meet these standards)
Timely claim — Input tax credits must be claimed within the time limits and tax periods specified by your jurisdiction's rules

Expenses that may have restricted or no tax credits

Many jurisdictions restrict or block input tax credits for certain expense categories, though the specific rules vary significantly by country:

Motor vehicles (unless used for specific qualifying business activities)
Client entertainment and certain meal expenses (rules vary widely by jurisdiction regarding staff meals, travel subsistence, and per diems)
Goods lost, stolen, or used for personal purposes
Expenses related to making exempt supplies (if your business makes both taxable and exempt supplies, input tax recovery may be restricted or require apportionment)

The ability to recover input tax depends primarily on what your business does—whether you make taxable or exempt supplies—and the nature of the purchase, not simply the vendor's industry sector.

Shared costs and partial business use

When employees use personal assets partially for business—such as home internet or mobile phones—companies may choose different reimbursement approaches. Some reimburse only the business-use portion, while others reimburse the full amount or provide a fixed stipend.

Example: An employee's $100 monthly internet is used 40% for business. If you reimburse $40, you can claim input tax credit only on the tax portion of that $40, calculated according to your jurisdiction's apportionment rules. If you reimburse the full $100, you would typically claim input tax credit only on the business-use portion and may need to account for any private-use adjustments under local rules.

How Ramp handles VAT and GST in reimbursements

Ramp's reimbursement workflow captures the documentation to support your tax credit review process:

Receipt capture — Employees upload receipts showing full VAT or GST details through mobile app, email, or web
Amount tracking — The platform records the total reimbursement amount including all taxes paid
Categorization — Expenses are categorized to support your team's review of which expenses may be eligible for input tax credits
Audit trail — All receipts and transaction details are stored with timestamps for tax authority audits
ERP sync — Reimbursement data flows to your accounting system where your team processes tax credit claims