The delivery of events in overseas countries has always posed a logistical challenge and things only got that little bit more complicated post-Brexit.
Prior to Brexit, the key considerations for businesses delivering events in Europe were much more around logistics, for example staffing events, coordinating with local and international suppliers.
Businesses who specialise in delivering events or who support the delivery of events outside the UK are now met with a far greater number of VAT challenges, which if not correctly managed, can add significant costs and compliance obligations.
We have outlined a number of the key considerations below.
Local VAT registration requirements?
Depending upon the nature of the events being hosted, you may be required to register for VAT in the EU country where the event is being held. We work with clients who host and support the delivery of events overseas and have outlined two different scenarios below.
Client A
The client provides admission to educational conferences in the UK and in the EU.
Where it supplies conference admission to private individuals, it may have to register in the EU country where the event takes place. There can be VAT exemptions for educational events, but the local rules need to be considered.
Where conference tickets are sold on a B2B (business to business) basis, the receiving business should be able to account for the reverse charge where the service is received. Where this is the case, this can help to remove any local requirement to register for VAT in an overseas country, whilst ensuring that VAT is accounted for appropriately.
We worked with our client to restructure the booking requirements, so that it no longer sold admission tickets to private individuals and all the tickets were supplied on a B2B basis. We were able to establish that the attendees were essentially private individuals buying tickets personally that would be expensed back to their employers. Changes to the booking process allowed our client to demonstrate that they were supplying B2B and not to private individuals.
Client B
The client provides exhibition stand design and installation services for high profile events in the EU and rest of world.
One of the key considerations for our client is whether the services provided should be treated as a land related service or a B2B general rule service, for place of supply purposes. In most cases, this interpretation comes down to the local country’s rules in terms of what is defined as a land related service.
We assisted the client in determining the correct place of supply for the contracts they were entering into with their clients. We also helped to reduce the number of overseas VAT registrations required using, for example, the temporary installation provisions and whether the services provided were sufficient to be viewed as a land related service.
There were countries where we concluded that local VAT registration was the preferred route. This was the case where significant amounts of local VAT were incurred, for example, in Dubai and Saudi Arabia. The local tax authorities’ approach to tax, compliance and potential penalties were also key considerations and in most cases the benefits to registering for VAT outweighed the local costs of compliance. This was particularly relevant where local sub-contractors were used to erect installations and the structures were viewed as land related supplies.
We supported the client in preparing a decision making tool to ensure the correct VAT implications are considered and VAT coding is applied for the contracts and services to be supplied. This approach helps to make sure that VAT is considered early and not as an afterthought. It also helped to build the client’s team confidence and knowledge and reduced the level of errors.
Shipping goods across borders
Where businesses move goods from the UK to an overseas country, it will be necessary to ensure the goods can be exported from the UK and imported into the relevant country in an efficient VAT and Customs Duty manner.
The temporary movement rules can often be used to suspend and remove import VAT and duty costs where the goods will be removed from the relevant country once the event has finished. There are compliance steps to achieve this in terms of completing the import documentation appropriately along with the record keeping requirements to evidence that the goods have been removed within an appropriate period of time.
Where the goods will not be removed from the relevant country, consideration should be given to how best to structure the arrangements to ensure any import VAT is not a cost. There are potentially a number of different approaches to this and the best approach often depends on the individual requirements of the project.
Reclaiming overseas VAT
Where VAT is incurred overseas, it may be possible to submit an overseas VAT reclaim if the relevant country has a reciprocal arrangement with the UK.
Where a VAT refund claim is possible, the requirements tend to be more onerous and can involve the need to appoint a fiscal representative in the country where the VAT has been incurred. The format of claims is less prescribed than it was for EU VAT refund claims and it is time consuming both in terms of process and timescales for the overseas country to refund the VAT. Timing is also important as claims have strict annual deadlines and it is not possible to make a claim for VAT recovery once the deadlines have passed. That said, the alternative could be to simply write off the VAT as a cost (or restructure the supply chain).
It is really important to have a clear understanding of the supply chain, where you provide events overseas.
Key considerations
- the precise nature of the services to be provided
- the contractual arrangements
- the place of supply of the services to be provided
- the place of supply for any goods/services purchased to deliver the contract
- the VAT position in relation to any ancillary goods supplied
Final thoughts
It is really important to have a clear understanding of the supply chain, where you provide events overseas. We would always recommend that the VAT implications of any potential new contracts are reviewed and considered from a VAT perspective to ensure no surprises.
Once you have a clear picture of the likely VAT considerations, you can then make informed decisions in terms of how best to approach the challenges and it gives you the opportunity to restructure the arrangements where the supply chain is inefficient.
With VAT rates typically in the region of 19% to 25% and potential local penalties for non-compliance, getting the VAT position wrong is likely to significantly impact the profitability and margins on your contracts. Add to that the wider time, effort and resource required to respond to a potential challenge by the local tax authority and I would like to think, we have case for confirming the position from the outset.
Contact Haines Watts for more information.
