VAT Position & Leakage
Find the VAT hiding in your intercompany flows
Intercompany pricing carries a real VAT footprint that rarely gets modelled properly. Where entities cannot fully recover the input VAT they pay, actual cash quietly leaks out of the group over time. This module maps every intercompany flow, quantifies the leakage precisely, and gives you a documented path to fix it.
Inside the module
Flow-by-flow VAT mapping
Each intercompany flow is mapped to its VAT treatment — reverse charge, exempt, or taxable — along with the applicable rate and jurisdiction of supply. This gives finance and tax teams a single, structured view of VAT exposure across the whole group, rather than piecing it together manually flow by flow every quarter.
Leakage identification
Where input VAT is not fully recoverable — due to partial exemption, passive holding entities, or mixed-use activities — the tool flags the leakage and quantifies exactly how much it costs the group each year across all entities. That turns a vague concern into a concrete figure finance can act on with confidence.
Cash-flow view
See the VAT paid versus recovered for each entity in each period, including timing differences between output and input VAT that can otherwise distort short-term cash-flow forecasts significantly. This helps treasury anticipate genuine funding needs rather than reacting after a shortfall has already appeared.
Documentation trail
Every VAT decision taken within the tool is documented automatically, providing a clear, contemporaneous audit trail for tax authorities and internal review alike across every jurisdiction. That documentation reduces the time spent reconstructing rationale months later and strengthens the group position in any future enquiry.
Use cases
When to use it
Group VAT reviews and health checks
Setting up intercompany flows in new jurisdictions
Quantifying VAT leakage for holding structures
Preparing for VAT audits or ruling requests
Quantify your VAT leakage
Book a call to see how much VAT is genuinely leaking through your intercompany flows, using your own entity structure and real transaction data rather than a generic example. In most cases the figure is larger than expected, and the same session shows the practical steps available to stop that leakage taking hold.
Frequently asked
VAT analysis FAQ
What is VAT leakage?+
VAT leakage occurs when a group entity cannot fully recover the input VAT it pays — typically because it makes exempt supplies, acts as a passive holding entity, or holds partial-exemption status under local rules. The unrecovered VAT becomes an absolute, permanent cost sitting quietly on the group balance sheet.
Does this replace a VAT return?+
No. It complements the VAT return entirely, by showing how intercompany pricing decisions actually drive VAT positions across the group, and where structural or contractual changes could meaningfully reduce leakage over time. Filing obligations remain unchanged; this simply explains the numbers behind them clearly.