Meeting in Europe
BY PEGGY SWISHER

In this second in a continuing series on the benefits and considerations of meeting in Europe, an expert explains how the Valued Added Tax (VAT) works in relation to events.

The Value added tax, or VAT, in the European Union (EU) is a general, broadly based consumption tax assessed on the value added to goods and services. It applies more or less to all goods and services that are bought and sold for use or consumption in the EU. Businesses and business travelers may get VAT refunds on business expenses, including lodging, transportation, intercompany billings, professional services, marketing and productions, meetings, conferences, and exhibitions.

Martin Pinsonnault, president of TaxPort USA Corp., a VAT file management company, suggests meeting planners start by establishing the parameters of their meeting or event in order to clearly establish their liability, their chances of VAT recovery, and whether or not it requires registration for the local VAT. EU tax laws are based on a set of directives and a number of exceptions are actually being sought by EU states. This situation can create confusion and leave room for interpretation.

“It’s becoming a very precise industry,” Pinsonnault said. “Our job is to make sure we have all the data from our clients or perspective clients so that we can provide them with an exact answer.” The following information is important in determining VAT refund potential:

• Participants — whether they are employees of corporations; association members; from a specific trade (medical, insurance, banking); for-profit versus non-profit groups; or students
• Number of attendees and exhibitors — the percentage of nationals versus the percentage of nonresidents, and the number of sponsors that will be charged or will barter in exchange for services
• Type of meeting or event — a conference, conference and trade show, seminar (with training and learning), product launch, or incentive trip
• Location of event — in some countries, the tax administration is managed at the county level.

VAT rules and applications change and so can the VAT rate, Pinsonnault warned. For example,
the current VAT rate on most expenditures in Germany grows from 16 percent to 19 percent in January 2007, which could have “a serious impact on your budget if you aren’t prepared,” he said.
Planners planning a meeting in Europe shouldn’t feel overwhelmed by the complexities of the VAT.
Numerous resources can help, including:

• Convention centers can in many cases provide you with basic assistance, although their expertise tends to be limited to their own product.
• Reclaim agents have experience in recovering VAT paid out but not necessarily on VAT registration issues.
• Tax lawyers will provide exact information with respect to current and future tax registration requirements and tax recovery rules and regulations.
• VAT file managers combine the knowledge and expertise of VAT reclaim agents and tax lawyers so that the VAT recovery is maximized while ensuring compliance with current local rules and regulations. Their advice will also cover issues such as the information required by the local VAT on the invoices issued to your attendees or exhibitors, the exchange rate, the format to report the VAT, when VAT is paid, as well as providing on-site assistance for larger groups.

Pinsonnault said a number of event organizers might come to realize that they are not or have not been compliant with respect to local requirements. This in some cases does not prevent them from going back in time (retroactively) either to register or to claim back VAT. Each case has to be analyzed

in order to assess VAT recovery possibilities or VAT compliance requirements. “In most cases, we are looking at good news,” he said.