by Judy Wickens, Union of International Associations, UIA VAT. Value Added Tax is of concern to all associations: when they pay it or reclaim it, if they are registered or exempt, it affects them all. Two recent changes have occurred which are a major upheaval, so international associations with any EU connections need to take them into account. One concerns the effect which the place where an event is held has on the tax rates and regulations governing payments for that event. The other, new in 2012, modifies the ground rules for the registration of associations in Belgium, where many are founded or operating for proximity to the European institutions. As goods or services are provided by sellers to buyers down a supply chain, Value Added Tax is added at each stage and then reclaimed, until the final customer or consumer is reached: this purchaser can not reclaim the tax it has paid, and the money remains with the state. An association which is not registered does not add VAT to its invoices, and it pays tax on incoming bills without claiming any refund, as does a private individual. One system operates across all the EU members, although it is not fully integrated as each state's tax administration implements VAT with its own rates, exceptions and procedures. Many other countries (e.g. China, Australia, Switzerland) also operate a form of value added tax. Associations which have registered for VAT (or other alphabet soup such as TVA, BTW, MwST) apply the tax to their invoices, either by collecting tax payments and remitting them to the authorities or by following a procedure of exchanging registration numbers which obliges the recipients of the invoices to declare and pay the tax to their own authorities ('reverse charge'). As the tax and details of its operation vary considerably even across the EU, the wording of invoices, dates of remittance or reclaim, and procedures, need to be scrupulously observed. In 2010 and 2011 the EU made changes to the rules covering conferences and events, so that the VAT rates and rules applicable are now those of the place where the event is held. If an association is well off and can employ congress organisers these must take care of tax concerns. But many associations organise their events themselves so they must investigate and then comply with the regulations applicable to the venue, which may require them to obtain registration in that country (even if they already have it in their home country) or to use a local agent, thus adding another level of administration and a cost which will eat into their budgeted income. These considerations should be faced in the earliest stages of planning, especially if events are held in different countries each year, with some outside and some within the EU. Rules and rates may be different for exhibition and conference sections of the same event, and for varying levels of participation or service, and the term 'admission charge' is interpreted differently from one country to another. Treatment of VAT on fees may depend on the home country of the participants. Those who run associations know that a large proportion of the effort of the event is put in at HQ beforehand, with planning programmes, engaging speakers and booking in participants, the event itself seems to pass in a flash. Associations which make no specific charge for an event but include it in their annual fee have to take this into account, also. Those seeking information are advised to consult at least three sites or sources and compare the guidance given, also to ensure it is up to date. For associations founded under Belgian law, as many are, a complete re-think of their VAT status was imposed in the first weeks of 2012 for the first return of the year, in January or March. For those whose main activity is defending their members or representing them to decision-making bodies, termed 'lobbying', for a fixed subscription, they are exempt from VAT: they do not apply it to invoices or recover the tax they have paid on their purchases. (Note that 'exempt from tax' is not the same as '0% rated'.) Associations which provide individual services to their members, publish newsletters and information, but do not lobby as their main (or any) activity, are subject to VAT – they apply it to their invoices but can recover it in turn on invoices they pay. ('Application' may be a direct charge or respect the conditions for a 'client' based in another EU country to arrange its own payment.) Before 2012 associations could be partly-registered, with a proportion of their activity subject to VAT and the rest being exempt. A common, standard proportion was 80/20, but other proportions could be arranged by observation of their regular activity and whether it was considered to be lobbying or not. This partial registration has now officially ended, and organisations must be 100% in or out of the system... in principle. For those with a choice (in Belgium or elsewhere), registration is in the organisation's interest if its members are themselves tax payers which can claim back the tax levied on the organisation's fee invoices. However simple the basic principle, there are multiple complexities and exceptions, raising many questions for associations with members across the world, in and out of their own country and the EU, and their need to hold events in a variety of places. But there is no doubt that associations add value to our lives. | ||||||