The European Union value-added tax laws have undergone significant changes as of January 2015. Consultants Jean-François Benard and Marc Lieber of BC&A have the answers when it comes to VAT, and their expertise is the basis for a resource guide now available on the PCMA website.
Following are their answers to 3 commonly asked questions about the value-added tax, or VAT:
1. To which country’s VAT laws will our event be subject?
The delegate fee to a congress or an exhibition is always taxable in the place where the event is held, and will be charged with the local standard VAT rate.
2. What are the key issues for recovering VAT?
Invoices are the documents that determine the amount of the VAT to be reimbursed by the tax administration. Because an event is subject to what is called the ‘Place of Supply’ rule, invoices shall be issued according to the law where the event actually takes place. The professional buyer (either organizer or participant) is responsible for the invoices received. Upon review by the tax administration, a request for reimbursement may be rejected if the required legal wording does not appear on the invoice. Finally, the organizer must issue invoices that enable its clients to recover the charged VAT.
3. Should a not‐for‐profit association charge VAT on its nvoices?
European law maintains that state, regional and local government authorities (and other bodies governed by public law) shall be regarded as taxable persons in respect of those activities or transactions where their treatment as non‐taxable persons would lead to significant distortions of competition. For example, in a country where the VAT rate is 19 percent, registration for a meeting would be $1,000 without VAT and $1,190 with VAT. This is a significant difference and would be considered a “distortion of competition.”