VAT and ACM
What is VAT?
VAT is a tax on consumer spending. VAT-registered traders collect it on their
supplies of goods and services. Each such trader in the chain of supply from
manufacturer through to retailer charges VAT on his or her sales and is entitled
to deduct from this amount the VAT paid on his or her purchases. The effect of
offsetting VAT on purchases against VAT on sales is to impose the tax on the
added value at each stage of production – hence Value-Added Tax.
Who is a Taxable Person?
A taxable person is any person or business who independently carries out any
business in the VAT related country. It includes persons who are exempt from
VAT.
How is VAT Charged?
It is charged as a percentage of prices, which means that the actual tax burden
is visible at each stage in the production and distribution chain.
It is collected fractionally; via a system of partial payments whereby taxable
persons (i.e., VAT-registered businesses) deduct from the VAT they have
collected, the amount of tax they have paid to other taxable persons on
purchases for their business activities. This mechanism ensures that the tax is
neutral regardless of how many transactions are involved.
The seller of the goods pays it to the revenue authorities.
Registered VAT traders are given a number and have to show the VAT charged
to customers on invoices. In this way, the customer, if he is a registered trader,
knows how much he can deduct in turn and the consumer knows how much tax
he has paid on the final product.
VAT Exemption/Registration
The European region does not have a universal VAT exemption.
The requirements to register, the granting of an exemption (rare) or obtaining
reduced VAT rates are dependent on the host country’s VAT laws and the
specifics of the event (co-sponsored by a university or finances managed via
third party, etc.).
As the term suggests, supplies falling under a category exempt from VAT are
sold to the buyer, normally a final consumer, without any VAT being applied to
that sale. Exemptions from VAT include for example, certain activities in the
public interest (medical care, school education etc.) or certain insurance and
financial services.
However, as the supply is exempt from VAT, deduction of the VAT paid on
purchases is not possible.
VAT Rates
The most reliable source of information on current VAT rates is that country's
VAT authority.
The chart below outlines the current (March 2011) VAT rates and names for
some countries. This is only a guide and you should contact ACM and or the
specific country’s VAT authority to get current rates.
Country
Austria
Belgium
Denmark
Finland
France
Germany
Holland
Ireland
Norway
Sweden
Switzerland
United Kingdom
VAT Names
UST / MWST
TVA / BTW
MOMS
ALV
TVA
MWST
BTW
VAT
MVA
MOMS
MWST
VAT
Rate
20%
21%
25%
23%
19.6%
19%
19%
21%
25%
25%
8%
20%
Guidance
ACM has been working with TaxPort USA, Inc., EuroTax, EasyTax among
others to assist us with our tax responsibilities outside the U.S., including but
not limited to registering, obtaining exemptions (where possible), VAT rates,
appointing fiscal representatives in the host country, filing, paying, recovering
VAT and de-registering when applicable.
Please contact Darren Ramdin at ramdin@hq.acm.org, for additional
information and guidance.