International organizations

The most frequent error in VAT:

“We are a non-profit Association so we have no VAT obligations.”

  • True = Many VAT exemptions require a non-profit making aim
  • True = Real grants and donations fall outside scope of VAT if there is nothing in return
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However

  • A lot of payments are labelled “grant” or “subsidy” but are in reality a payment for a service subject to VAT.
  • A lot of VAT exemptions require other conditions to be applicable (e.g. to exempt membership fees from VAT it is often required that the main aim is lobbying)
  • Even fully VAT exempt VAT taxpayers (established in Belgium) must pay Belgian VAT on most services from non-Belgian established service providers.

Take aways

  • Many non-profit associations do have VAT obligations. Failure to do so creates risks upon a tax audit.
  • Most/all risks can be waived by filing a spontaneous correction in transparancy with the Belgian authorities
  • VAT is not a negative thing since being subject to VAT:
    • does not mean that you have to charge VAT on all income (e.g. membership fees to non-Belgian organizations/companies must be invoiced without VAT but give entitlement to VAT deduction).
    • gives you entitlement to (full or partial) VAT deduction on your costs. There are also specific tolerances for a.o. EU horizon projects.

Testimonial(s)

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Pablo Núñez Fernández

Treasurer, European Federation of Geologists

As Treasurer of the European Federation of Geologists, representing 27 European countries, I am pleased to commend VAT SQUARE for their outstanding service. Their proposals are characterised by remarkable speed and reliability, skillfully navigating the complex needs of our diverse federation. Their professional expertise has been invaluable, and I highly recommend them for their support and efficiency.

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Fanny-Pomme Langue

Secretary General Confederation of European Forest Owners (CEPF)

Answering to complex VAT related questions in a clear and understandable way is a mission that Vatsquare experts perfectly undertakes. We worked with Karen and Wendy who have shown a very quick and good understanding of questions at stake in our organisation and answered perfectly to all our questions both in writing and orally. Such expertise is very valuable for small-size organisations like ours.

    How can we help?

    To determine the VAT risks and/or opportunities first the VAT status must be analyzed. The VAT status (whether the organization is a fully exempt VAT taxpayer, a mixed VAT taxpayer, a partial VAT taxpayer,…) is determined by different elements: the aim, the type of income, whether activities are performed “for free” etc.

    Subsidies or grant agreements (if applicable) will add another level of complexity. Depending on the obligations and the conditions agreed (different for each contract), the amount received qualifies as a subsidy or as a remuneration for a service. For certain projects (a.o. EU horizon) the Belgian administrative guidelines allow VAT deduction even if qualified as a subsidy.

    This includes:

    • An analysis of the VAT status
    • An overview of the VAT treatment of the different incoming and outgoing supplies, income and activities (including invoice requirements and reporting)
    • An overview of the VAT reporting requirements
    • An analysis of the right to deduct input VAT (and how to)
    • (if applicable) a risk estimate
    • (if applicable) an overview of recommended next steps and suggestions