Reclaim Your VAT Refund for More Profits in Europe
Exhibiting successfully requires some funds – everywhere in the world. In certain European countries you are able to reclaim the locally charged tax for VAT refund. But not everywhere and not for everything. Therefore we have asked our cooperation partners from Euro VAT Refund Inc. to create for you an European VAT refund matter overview. Please read their following statement carefully:
Value Added Tax (VAT) is a consumption tax added to most goods and services in many countries around the world. The national tax systems of Europe, Japan and Australia allow most non-resident business entities to claim a refund of VAT. A few of the services where North American companies that do business within Europe can be charged 17-27% Value Added Tax (VAT) are:
• Professional fees
Diverse VAT Refund Rules within Europe
VAT refund rules and registration requirements vary from country to country, and many EU countries refund VAT on a number of services and products to North American business entities if they follow the proper procedures. There is generally no reason VAT paid in Europe should be absorbed as a cost by the North American company.
Sample scenarios where VAT will come into play when North American companies or organizations plan to exhibit within the EU:
Purchase of raw booth space at tradeshow
If a North American company purchase a raw booth space at the tradeshow, 17-27 VAT will most likely be charged to the North American company. In most cases no VAT will be charged if the booth includes additional services such as rental of furniture, internet access, and cleaning. These rules vary from EU country to EU country, and it becomes very complex since it is often unclear how many services that have to be included, and whether the services included are considered a service or not.
Rent space at tradeshow with purpose of reselling
If a North American organization or company is planning to rent space at the tradeshow for the purpose of reselling to other companies, and any part of this space is “raw space” then they may have to register for VAT within the country of the show and also charge VAT to the companies. This is quite complex where the organizations and companies need the education and awareness to both behave legally and to be able to reclaim the VAT incurred.
VAT on shipments of products/goods for tradeshow
This is another area where US companies in most cases are unaware, and many of them will incur 17-27% import VAT if they do not set up the shipments correctly from the start. Most US companies are not aware about the temporary import option (also called carnet) where no VAT and duty will be charged on the shipment if they just can prove that the same goods that go into one EU country also will go out within a certain period of time.
VAT Matters for Organizing Events Within the EU
For VAT claims that are not Travel and Entertainment expenses, registration for VAT may sometimes be required prior to the transactions in order to get a refund. Below is a description of the general VAT rules that apply when a North American company is planning an event within the EU. It is important to check on the details prior to any planned event since the VAT rules can greatly vary from case to case and from country to country.
1) Can the approximate 20 percent VAT paid to the EU vendors be reclaimed?
Generally the North American company that pays VAT to EU vendors for conference/event/trade show services can reclaim the VAT from the local tax authorities in some of the EU countries. VAT registration might be required prior to the event in order to be able to apply for a VAT refund. This is usually the case if any fees are to be collected from the attendees of the event. Please find below countries that refund VAT to North American companies*
2) When is registration for VAT at the planning stage required?
North American companies are most likely required to register for VAT at the planning stage and charge VAT to all, or some, of the attendees/exhibitors if they plan to charge either an attendee fee, or for exhibit space.
Registration is usually not required if there is no attendee fee, and no revenue is collected for the event. For example, VAT registration is generally not required for in-house meetings or marketing events where no fees are collected from the attendees or exhibitors.
A North American event planner who plans an event for a corporate client in one of the EU countries usually does not have to register for VAT nor charge VAT to their client. This is an advantage if the event takes place in an EU country that refunds VAT to North American companies*. It also means that the U.S. event planner can reclaim most of the VAT that they have incurred from the EU vendors without having to be registered and charging the VAT to their North American client. It is not an advantage if the event takes place in any other EU country, since it means the VAT cannot be reclaimed and will end up as a cost.
*European Countries that refund all or parts of the VAT to North Americancompanies/organizations (If not VAT registered): Austria, Belgium, Denmark, Finland, France, Germany, Iceland, Ireland, Monaco, Netherlands, Norway, Spain, Sweden, Switzerland and the United Kingdom.
VAT Refund Sample Scenarios:
In-house meeting / No attendee fees charged
A North American business entity organizes an in-house meeting in the UK. No fees are charged to any of the attendees. They contract directly with the UK vendors, and do not use a DMC:
Net cost from the UK vendors $100,000
20 % UK VAT $20,000
Total paid to the UK vendors $120,000
Note: The $20,000 in VAT can be reclaimed from the UK VAT authorities. Registration at the planning stage is not required.
Company event / Attendee fees charged
A North American business entity organizes a user conference in Germany. 1,000 attendees will pay a fee to attend, and there will also be exhibitors and sponsors.
The North American business entity does all the planning in-house for an event in Germany. VAT registration at the planning stage is required. VAT has to be charged to all the attendees and some of the exhibitors:
Fees from attendees and exhibitors $200,000
19 % German VAT $38,000
Total charge to the attendees and exhibitors $238,000
Note: The VAT is refundable to almost all companies, so it will not be a cost to them.
North American business entity pays to German vendors:
Net cost $100,000
19 % German VAT $19,000
Total paid to German vendors $119,000
Note: The VAT is refundable when the North American business entity files a VAT return to the German tax authorities.
Event planner organizes an event in EU country that refunds VAT to North America
A North American event planner organizes an in-house meeting for a North American business entity in Sweden and contracts with Swedish vendors.
North American event planner pays to the Swedish vendors
Net cost $100,000
12 % Swedish VAT $12,000
Total paid to Swedish vendors $112,000
Note: The event planner can in most cases claim back the VAT from the Swedish tax authorities without prior VAT registration.
Event planner organizes an event in EU country that do not permit VAT refund to North America
A North American event planner organizes an in-house meeting for a North American business entity in Italy and pays to the Italian vendors.
Net cost $100,000
22 % Italian VAT $22,000
Total paid to Italian vendors $122,000
Note: The VAT cannot be reclaimed, since Italy does not give any VAT refund to North American companies at all. The VAT ends up as a cost.
VAT Refund Conclusions
Most North American companies are not aware how the EU VAT system works and many of them will incur the 17-27% VAT if not set up correctly from the start. VAT should generally never be a cost to a company, and if the North American company is unaware about the possible VAT charges and VAT liabilities, the VAT might later end up as a cost.
Euro VAT Refund, Inc. (EuroVAT) is a leading U.S. financial services firm based in Los Angeles, specializing in assisting U.S. Companies with their Value Added Tax (VAT) management and refunds when they do business in Europe. EuroVAT offers advice how to manage the VAT refund for an upcoming business trip or a planned meeting in Europe. Our leading VAT experts have the specialized knowledge and procedures in place in order to expedite claims for prompt returns and maximized refunds. For further information, please visit www.eurovat.com.
If you have any doubts or questions concerning your European VAT issues you should contact our friends at EuroVAT immediately.
In case you require professional support for your successful tradeshow booth in Europe you should talk with us as soon as possible.