Value-Added Tax

Value-Added Tax (VAT) is a national sales tax on goods and services that is levied by many countries around the world. In 1987, the European Union (EU) began offering refunds of VAT to foreign companies that travel to participating EU countries for business purposes. University employees who travel to these countries must participate in the VAT program. View countries that participate and rates.

Learn more about Penn State's VAT policy.

Participating in the VAT Program

The Value Added Tax (VAT) Reclamation submission procedure is initiated through the Employee Reimbursement System (ERS).

The procedure of submitting VAT Reclamations with ERS is as follows:

  • When completing a travel expense report, if a foreign country is entered in an itinerary or expense, or is pulled in by a purchasing card charge, an audit rule will take effect which displays the following exception message: “This report includes expenses that may be eligible for VAT Reclamation. Please print the VAT Transmittal Cover Sheet from the Print menu and submit the specified receipts to Accounting Operations.”
  • This should prompt the traveler (or delegate) to review the receipts and print the VAT Transmittal Cover Sheet from ERS. 
    Important: Original receipts continue to be required for VAT reclamation submissions, including meal or lodging per diem expenses. Travelers need to be aware that submitting the original receipts for expenses which fall under the OCONUS per diems will not impact the amount of their reimbursement, even if the actual expenses are lower than per diem. Also, the VAT original receipts which are not required for per diem purposes will NOT be scanned into ERS.
  • Once the travel expense report is entered, the traveler (or delegate) should staple the required original receipts to the back of the VAT Transmittal Cover Sheet from ERS and mail them to Accounting Operations in 202 James M. Elliott Building at University Park.
  • Accounting Operations will continue to accumulate the VAT reclamations and submit them to our third party collector. With this process in place, Accounting Operations will now have the capability to run reports from ERS to locate any pending VAT reclamations and follow up with the department for original receipts.
  • When refunds less processing fees are received from the third party collector, the funds will be credited back to the traveler’s home administrative area. The Report Key number which appears on the cover sheet is the tracking number assigned to that specific VAT reclamation and will be used to match any refund received from the third party collector. Accounting Operations will provide a report to the Financial Officers for the VAT reclamations included in their refund.