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When does an events business pay VAT when working abroad ?
When is VAT applicable and when can it be reclaimed ?
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The way UK events companies reclaim VAT from overseas is not easy , with Brexit adding a new layer of complexity . Martin Fullard meets an expert
Alexandra Korotkova is the CEO of a company called MICE VAT , a specialist business which helps UK businesses reclaim their VAT from work carried out overseas . The subject is a tricky one , and as is the way with these things , shrouded in complexity .
However , now the UK has left the European Union , further bureaucracy exists . With no real understanding of the complexity myself , I caught up with Korotkova to try and make sense of it all .
A corporate event is a complex operation which consists of multiple services and goods purchased separately by an events company from various foreign suppliers . Each service or product has to be taxed according to specific VAT rules established by the supplier ’ s country . As a result , often a foreign supplier will charge tax at their local VAT rates which normally vary for different items .
VAT is charged on the supplier ’ s invoice and , in principle , it can be reclaimed by a purchasing company as soon as an invoice has been paid . In practice , a final VAT invoice is normally issued and fully settled after an event . Also , bearing in mind that only one VAT refund application per quarter and one additional claim per calendar year is allowed by VAT authorities of each country , it ’ s good practice to wait for the quarter-end before submitting a refund request .
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Is the VAT payable when you sell a service remotely , or is it when you provide a service on the ground in person ?
Will an events business know it has been charged VAT ?
Give us a summary of how complex the process is for reclaiming VAT ?
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Here we need to consider the place of supply rules for B2B transactions . Each European country has its own legislation , but generally , digital services are not subject to VAT in the supplier ’ s country , whereas services directly related to land are taxed on the territory where they are enjoyed . The latter can include any services provided by a hotel , venue , AV equipment supplier , decoration agency , transport company , restaurant , etc .
Yes , normally an events business will know they have been charged VAT , because a final invoice from a supplier will show a breakdown of VAT applied . However , it won ’ t be as transparent if we talk about services such as accommodation or transport booked through a DMC which normally applies a special scheme for travel agents ( known as TOMS in the UK ). In this case , a buyer won ’ t see the amount of VAT charged on the underlying services by an initial supplier , such as a hotel . That ’ s because this VAT is blocked from recovery for both the DMC and the end-recipient of the service .
Despite unified laws , each European country has got its own specific rules and requirements , as well as prohibiting VAT refunds on certain items . For instance , France disallows VAT recovery on accommodation for a company ’ s employees , while Portugal applies 25 % apportionment to a refundable VAT amount . Such peculiarities in VAT reclaim rules can be found in every jurisdiction . And this adds complexity to the process .
As a matter of fact , there are two distinct procedures , depending whether your business is established in the EU or outside . An intra-community VAT refund process is a little simpler , as the application is submitted through a local tax authority ’ s online portal .
A non-EU company has to follow a different procedure , regulated by
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