Ranging from 3.6 percent in Switzerland to a whopping 25 percent in Denmark and Sweden, value-added tax (more commonly known as VAT or by various other acronyms) represents a hefty portion of a meeting's budget. The good news is that many countries in Western Europe as well as Canada and Korea will refund at least a portion of the VAT paid for business-related services, ranging from travel expenses to exhibitor fees, booth rental, catering, and other costs of doing business. Eligible expenses and procedures for submitting them vary from country to country.
Who Qualifies? Many types of meetings qualify for a VAT refund, although the rules can be difficult to decipher. An event involving a single U.S. company's employees, for instance, would be eligible under most VAT guidelines. The company would send original invoices to the VAT authorities, who audit the claim and issue a refund.
Conferences involving registration fees fall into a different category. The latter events may require the organization to register for a VAT number and charge VAT to attendees. The registered organization will then be able to recover taxes paid on business expenses associated with the event.
Associations occupy a gray area where VAT is concerned. “An association that merely generates revenue by collecting dues from its members would have problems getting a refund,” says Staci Krell, senior vice president with Meridian VAT Reclaim in New York. She explains that every country requires U.S. organizations to file an Internal Revenue Service form certifying that it is a taxable business, and since most U.S. associations are tax exempt, the overseas authorities will deem them ineligible to recover taxes paid.
However, an association-sponsored overseas event that charges exhibitor and attendee fees (such as a conference or exposition) is considered a taxable activity.
Figuring It Out: Determining your group's eligibility status and documenting expenses are essential to the VAT recovery process. “You might file the wrong way,” says Krell. “I can't tell you how many times people have come to me after they put on an event. But then it's too late — they can't charge VAT after it's all over.”
Original invoices from vendors issued to the group hosting the event — not an independent meeting planner, for example — are necessary. Some authorities have additional questionnaires that must be completed.And countries in the Euro Zone are now insisting on invoices in euros and issuing refunds in euros. Refunds can take anywhere from 3 to 18 months.
Recovering VAT expenses is not a simple process. “The rules are really different in every country,” says Krell, whose firm does the legwork for clients. “Even where they might sound the same, there are different procedural nuances when it comes to filing, and if you don't do it right, they're going to reject your claim.”
That's a compelling reason for outsourcing the work to a company like Meridian, Krell says. Meridian and similar firms often work on a contingency basis, with their fee dependent on successful VAT recovery. “If you don't get a refund, you don't pay us,” she says. “But if you file on your own and you find out that you're not going to get a refund, you've expended all that time and energy yourself.”
Megan Rowe is a contributing editor to Association Meetings and Medical Meetings magazines, as well as their sister publications. She has written extensively on meetings and incentive travel.