Compliance Check
VAT4U's compliance check system helps users quickly identify documents that may be non-compliant for VAT recovery. Below, you'll find an overview of the compliance statuses, how to interpret them, and how they guide your VAT recovery process.
In VAT4U, the term "Compliance" specifically refers to the adherence of an invoice or receipt to the formal requirements in a jurisdiction for VAT deduction or recovery eligibility.
It does not pertain to other compliance topics outside of VAT recovery criteria. Always ensure that invoices meet jurisdictional standards for VAT purposes.
Compliance Check Types
VAT4U offers two ways to run compliance checks, available when starting Compliance & Smart Checks from the Batch Actions menu in the Manage Expenses table.
Standard (Rule-based)
The standard compliance check uses deterministic pattern matching against the OCR text of the document. It searches for specific keywords, claimant information, VAT numbers, and other indicators based on the country of refund rules.
This method is fast, does not consume AI Credits, and is well-suited for high-volume processing.
Advanced (AI-powered)
The advanced compliance check uses AI with document vision and semantic analysis to evaluate compliance. Instead of keyword matching, it analyses the full context of the document — understanding layout, stamps, watermarks, and meaning.
Key differences from Standard:
Context-aware detection — for example, the word "copy" in an email address will not trigger a false positive, whereas a "COPY" stamp on the document will.
Fuzzy matching — company name variations and partial address matches are handled more intelligently.
Document vision — the AI can see the actual document image, not just the OCR text.
Consumes AI Credits — an estimate is shown before processing begins, and consumption of AI credits is offset against your current balance only for successfully processed expenses.
Note: The AI-powered compliance check is ran by default as part of the Smart AI expense enrichment process when processing expenses via Batch AI.
Note: The AI-powered compliance check is ran by default as part of the Smart AI expense enrichment process when processing expenses via Batch AI.
Note: When OCR has not yet been processed for some documents, the system will automatically run OCR first and then trigger the AI-powered compliance check once the OCR result is available.
You can see which type of check was performed for each expense in the Compliance Check Type column in the Manage Expenses table.
The possible values are Standard or Advanced. If no check has been run, the field will be empty.
How to Run Compliance & Smart Checks
Open the Manage Expenses table and apply filters to select the expenses you want to process.
Click Batch Actions and select Compliance & Smart Checks.
Choose the compliance check type: Standard or Advanced.
If Advanced is selected, the system will display the estimated AI Credits required and your available balance.
Review the verification summary showing the number of documents to process per check type (OCR, Compliance, Data Quality, Page Recognition).
Click Update to start processing.
Smart Checks will automatically run OCR where necessary, evaluate compliance, and assess data quality for the filtered expenses. After processing is complete, the following fields will be updated: Compliance Status, Compliance Check Type, Data Quality Match, VAT Amount Match, Invoice Date Match.
Compliance Statuseses in VAT4U
1. Not Verified
This status means the compliance assessment has not yet been conducted for the expense. This can happen if:
The OCR and Smart Checks weren't started after a bulk import of data, or
OCR information isn't yet available for the document.
If OCR and Smart Checks haven't been run, users can start them from the Batch Actions in the Manage Expenses table simply by starting Compliance & Smart checks. Alternatively, OCR and compliance checks run automatically if the user selects this option in the last step of the bulk import process. OCR generally processes around 100 expenses per minute.
2. Potentially Not Compliant
When VAT4U detects potential non-compliance, it assigns this status to the document. Non-compliance reasons can vary based on the VAT refund requirements of the country of refund.
For example, if VAT4U identifies a document as a credit card slip, it will display "Credit card slip detected" as the non-compliance reason.
You can view non-compliance reasons in the Non-Compliance Reasons column in the Manage Expenses table and within the Data Entry module.
The current set of possible non-compliance reasons includes:
Reason | Description |
Invoice copy or similar | The document appears to be a copy or duplicate, not an original |
Proforma or similar | The document is a proforma or draft invoice, not valid for VAT reclaim |
Credit card slip detected | The document is a credit card slip without proper VAT content |
Not a VAT invoice or receipt | The document is not a valid VAT invoice or receipt |
Missing claimant details | The claimant company name was not found on the document |
Missing claimant address | The claimant company address was not found on the document |
Missing claimant VAT ID | The claimant VAT number was not found on the document (when required by jurisdiction) |
Potentially incorrectly charged VAT | VAT may have been incorrectly charged (e.g. foreign flow with "Other Service" category) |
Missing VAT local name | No local VAT term (e.g. MwSt, TVA, IVA, BTW, VAT) was found on the document |
Disqualifying keyword found | A keyword indicating the document is not a valid VAT invoice was detected |
Note: When using the Advanced (AI-powered) check, detection is context-aware. For example, the AI will distinguish between a "COPY" watermark on a document and the word "copy" appearing in an unrelated context such as an email address or copyright notice.
3. Looks Compliant
When no non-compliance reasons are identified, the system assigns this status. This does not guarantee compliance, but it indicates that the document appears to meet VAT recovery requirements based on the data available.
4. Compliant / Not Compliant (User Verification Required)
In the Data Entry module, users can manually mark a document as Compliant or Not Compliant based on their own verification. This decision overrides the system's automated checks.
To expedite the process, users can also update compliance statuses in bulk using Batch Actions.
Keep in mind that the system's compliance checks rely on OCR and AI, meaning accuracy may vary depending on document quality.
Pro Tip
When reviewing the results of Smart Checks, it is advised to combine the Compliance Check result with the VAT Amount Match field:
If Compliance Status = Looks Compliant and VAT Amount Match = Matched, there is a good chance that VAT is present on the invoice and the amount is correct.
However, if Compliance Status = Looks Compliant but VAT Amount Match = Not Matched, this usually indicates invoices that require manual review or use of Smart AI enrich.
You can also use the Compliance Check Type column to filter and compare results between Standard and Advanced checks, which can be useful when evaluating whether the AI-powered check provides additional value for your specific document types.
Compliance Check Disclaimer
The compliance check feature in VAT4U, powered by embedded AI, is designed to assist users in evaluating invoices for VAT recovery eligibility. However, this tool does not provide a guarantee. Users remain fully responsible for verifying outputs, ensuring accuracy, and confirming compliance with jurisdictional requirements.
Always perform a thorough review before proceeding with VAT recovery claims.