VAT on European Trade Shows
Many foreign exhibitors at European trade shows raise the same question: “What the heck is VAT all about and what are the real key things I need to know about?”
First of all, the VAT issue for exhibitions within the European Union is not so severe and important anymore, compared to three or four years ago. There was an important VAT rule paradigm change enforced by an EU Court judgment in late 2011. By this all foreign commercial exhibitors have been completely exempt from any VAT payment on their show participation fees and domestic booth construction invoices for all trade shows within the European Union member countries.
The Value-Added Tax (in short VAT) is a tax on goods and services. Currently, there are VAT systems established in many different countries all around the world. The US, however, is still one of the few industrialized nations not using a value added tax system.
For foreign exhibitors, VAT can sum up to hundreds or even thousands of dollars, and getting an almost complete refund can be very positive to the Return On Investment calculation of their trade show programs.
Under a V A T system, every business must collect tax from each and every domestic customer and remit it to the responsible governmental tax office. This applies to factory, wholesale and retail sales. Each business collects VAT funds on sales and pays on the other hand VAT on all domestic purchases for goods and services.
The taxable company must remit to the tax office only the difference between the collected V A T amount and that V A T amount paid with their own purchases.
The foreign companies, however, carry a severe disadvantage in this tax procedure. They must pay V A T on its local purchases but, unlike a domestic competitor, it cannot offset this amount against that VAT collected on own local sales. As a result, the V A T system is discriminatory to the foreign companies.
The European Union has adopted a series of directives on V A T matters which permit certain refunds to ease the discriminatory burdens of the V A T. Each EU member state has been gradually adopting their national tax laws and regulations which allow for some V AT refunds.
But in general V A T refunds are only granted to companies from those countries which either have their own VAT system (reciprocity requirement) or according bi-national legal contracts between the states.
VAT Refund Opportunities
Each European country determines on its own which product or service VAT kinds will be refundable to which extend. There are a large variety of restrictive clauses and conditions, very unique and specific to each country, which will reduce the VAT refunds. Some countries may allow VAT refunds on all expenses. Others may permit VAT refund only on expenditures being directly connected with trade shows or exhibitions.
Qualifying international business expenses may include:
- Staff travel and accommodation
- Marketing expenses
- Trade show fees
- Technical service fees
- Booth hospitality
- Local advertising
- Market research
- Legal fees
- Consulting services
- Staff training
- Local representation
- Support services
Maximize your VAT refund by planning well ahead
Plan ahead, and save receipts, invoices, and payment proof carefully. Insist on putting your complete company address on all invoices for amounts higher than 100 Euro. Getting VAT refunds, especially from countries within the European Union, often hinges on whether or not you can submit the original invoices. You might also need to provide proof of payment, such as a bank transfer copy or a credit card slip.
Exhibitors or VAT-refund agencies typically submit this paperwork either immediately following a show or as soon as you return to the office. Be aware of which documents you need to submit and ensure you have a system for tracking receipts and proof of payment in place before you leave on your trip.
Going into a show with a VAT-recovery process in place will help make recouping the tax faster and easier post show. What’s more, after submitting the claim, it can take up to two years before the money is refunded. If you’ve forgotten to include a receipt or invoice, there’s little chance you’ll be able to track it down months after the initial submission.
Be prepared to provide pre-show paperwork and/or obtain third-party assistance. The process for claiming a refund isn’t rocket science, but it’s important to already do your homework well before the trade show starts. A VAT-refund agency can provide a wealth of info and often has bank accounts and local reps in various countries to meet this requirement, but always explore these country-specific regulations before the show.
VAT-refund application deadlines
Know your deadlines. For almost all European countries, you are required to submit your form sheets and documents for the previous calendar year by June 30th. Only for the UK the VAT-refund calendar is July through June, with the refund document submission deadline being December 31st.
Exhibitors entering a foreign country with various exhibits, give-aways, and other goods often have to pay a special import VAT on the items they’re bringing into the country – sometimes up to 25 percent of their value. However, in many instances, you can apply for a refund (also known as a claim) to recoup the tax after the show.
All those items which will leave the country again after the show it should imported based on an ATA Carnet – a special type of international customs and export/import document. Then you do not need to pay any taxes or custom dues at all, just the ATA Carnet fee.
Securing a V A T refund is a good way to put money back in your trade show budget. The only trick is that you need to have the knowledge, or the professional refund experts, necessary to properly assemble the correct documentation and file a claim for your refund on time.
Many smart exhibitors engage a service provider that specializes in European V A T refund services. Typically, you submit your original invoices and the required completed forms to them directly following your show, and they will file the checked documents in time to receive the refund for you. Charges required for such services vary, depending on the selected company and the required work extent of the claim. Here is a short incomplete list of some available specialists:
- Euro V A T Refund Inc., Culver City, CA
- International VAT Consulting Group Inc., Falls Church, VA
- RM Boulanger SA, European VAT Services, Neuville en Ferrain, France
- TaxBack.com, Chicago, IL
- TTM International LLC, St Paul, MN
- VAT IT New York, NY
- V A T Refund Services Dr. Schaefer & Marion Milde, Zorneding, Germany
- V A T Systems Sarl, Paris, France
Also some European show organizers provide the contact data of available reliable local VAT Refund Services for different countries.
Deloitte, a famous global leading group of companies delivering services in audit, tax, consulting, financial advisory, and risk management has published the extremely comprehensive and unique DELOITTE VAT Refund Guide 2016 (310 pages). Download it here.
VAT is an extremely complicated matter. We at EiE Exhibit House are no V A T or financial experts ourselves. Therefore please take the above content not as any legally binding statements.
You should always take specific advice from international tax experts like Euro V A T Refund from Culver City. We have a strong preference for them due to our past excellent personal experience, but it’s finally up to you whom to select for solving your European V A T refund matters.