Global fintech leader Way2VAT (ASX: W2V) is continuing to scale its operations, driven by increasing customer uptake of its VAT (value-added tax) reclaim platform.
The company expanded its European presence last month with the $4 million acquisition of UK specialist advisory and compliance firm RBC VAT, which has operated in the industry for more than 20 years.
The transaction immediately enhances Way2VAT’s advisory capabilities to complement its patented AI-driven technology powering the world’s first fully automated, end-to-end VAT reclaim platform, and accelerates Way2VAT’s path to earnings breakeven by year end and positive operating cash flow in the new year.
Israel-based Way2VAT was established in 2016 and has over 80 employees across offices in London, Barcelona and Romania.
The company’s AI-driven platform for VAT and GST reclaims, invoice validation, and digital tax compliance services a current client base of more than 400 enterprises including global realty company Jones Lang LaSalle, US chemicals manufacturer Solenis, and social media platform TikTok.
It currently generates revenue from subscriptions and transactions fees, and will drive its future growth targets via client expansion plans and cross-selling, geographic spread, and selective mergers and acquisitions.
Way2VAT believes the fragmented nature of the VAT advisory industry — where many legacy VAT agents struggle in an increasingly digitalised world — will offer future opportunities such as mergers and acquisitions, allowing it to combine its market-leading platform with profitable businesses to further scale its operations.
The company expects accelerated contract wins, greater than expected margin uplift, and potential new acquisitions for increased scale and synergy benefits will provide upside to its value.
In 2022, Way2VAT acquired Spanish VAT automation business DevoluIVA, which operates a fully digital solution for corporate expense management and automated domestic VAT recovery.
The deal opened up new markets for Way2VAT, and contributed significant transaction volume and revenue via its extensive national network.
After substantial ongoing growth and cost rationalisation since the acquisition, the company believes DevoluIVA will reach breakeven this year.
VAT reclaim as an in-house business process can be complex, with country-specific regulations, language barriers, and high potential for manual errors.
Way2VAT’s advanced platform eliminates these challenges and allows clients to focus on their core business by offering automated compliance checks, communication with tax authorities, and maximum refunds.
The platform works to capture all reclaimable expenses across accounts payable invoices, employee travel expenses, capital expenditures, and foreign VAT transactions.
It also tracks and manages strict VAT/GST reclaim deadlines, ensuring timely claims and improved cash flow for clients.
