VAT for Companies or Selling in the European Union

1 Presenting a live 110 minute teleconference with interactive Q&AVAT Fundamentals for Companies Buying or Selling in the European UnionBuying or Selling in the European UnionEnsuring VAT and Use Tax Compliance on Goods and Services Transactions1pm Eastern | 12pm Central | 11am Mountain | 10am PacificTHURSDAY, JUNE 28, 2012 Today s faculty features:1pm Eastern | 12pm Central | 11am Mountain | 10am PacificBritta Eriksson, President and CEO, Euro VAT Refund Inc., Culver City, Calif.,,,y,Mark Houtzager, Principal, US VAT Inc., New YorkChris Walsh, Chief Tax Officer, International, Vertex Inc.

2 , Berwyn, Bui, Senior Manager, State and Local Tax, KPMG, HoustonFor this program, attendees mustlisten to the audio over the refer to the instructions emailed to the registrant for the dial-in can still view the presentation slides online. If you have any questions, pleasecontactCustomer Service at1-800-926-7926 ext. MaterialsIf you have not printed the conference materials for this program, please complete the following steps: Click on the + sign next to Conference Materials in the middle of the left-hand column on your screen hand column on your screen.

3 Click on the tab labeled Handouts that appears, and there you will see a PDF of the slides for today's program. Double click on the PDF and a separate page will open. Double click on the PDF and a separate page will open. Print the slides by clicking on the printer Education CreditsFOR LIVE EVENT ONLYA ttendees must listen to the audio over the telephone. Attendees can still view the presentation slides online but there is no online audio for this must stay on the line for at least 100 minutesin order to qualify for a full 2 credits of CPE. Attendance is monitored as required by NASBA.

4 Please refer to the instructions emailed to the registrant for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 18009267926 ext. for Optimal QualitySd QlitSound QualityFor this program, you must listen via the telephone by dialing 1-866-873-1442and entering your PIN when prompted. There will be no sound over the web ect o .If you dialed in and have any difficulties during the call, press *0 for assistance. Yo u m a y a l s o send us a chator e-mail so we can address the QualityTo maximize your screen, press the F11 key on your keyboard.

5 To exit full screen, press the F11 key againpress the F11 key Fundamentals for Companies Bi S lli i th E Buying or Selling in the European Union SeminarJune 28, 2012 Mark Houtzager, US VAT Eriksson, Euro VAT Refund Bui, Walsh, Vertex Inc. To d ay s ProgramVAT B a s i c sSlide 7 Slide 14[Britta Eriksson]VAT In Europe[Britta Eriksson and Mark Houtzager]Slide 15 Slide 28 VAT Issues In The Supply Chain[Mark Houtzager]Expected VAT Developments In The Near FutureSlide 29 Slide 38 Slid 39 Slid 40 Expected VAT Developments In The Near Future[Chris Walsh]Importance Of Global Tax Management[Chris Walsh]Slide 39 Slide 40 Slide 41 Slide 46[]Use Tax Issues In The For Overseas Purchases[Bobby Bui]

6 Slide 47 Slide 55 NiNoticeANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY THE SPEAKERS FIRMS TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN. You (and your employees, representatives, or agents) may disclose to any and all persons, without limitation the tax treatment or tax structure or both of any transaction without limitation, the tax treatment or tax structure, or both, of any transaction described in the associated materials we provide to you, including, but not limited to, any tax opinions, memoranda, or other tax analyses contained in those information contained herein is of a general nature and based on authorities that are The information contained herein is of a general nature and based on authorities that are subject to change.

7 Applicability of the information to specific situations should be determined through consultation with your tax BASICSB ritta Eriksson, Euro VAT Refund Inc. VAT Sales Tax Assessed only on goods, not to services generally Only paid by the end user (business or private person) Is a cost to the business when it has to be paid is almost the only country in the world that has sales tax instead of VATinstead of Tax Consumption tax is added to most goods and services in all levels of the production and distribution chain. Implemented tax in most countries in the world except the Is almost never a cost to the business Is a cost to the private person Is a cost to the private person10 Samples Of VAT Names And Rates AustraliaGST10% AustraliaGST10% CanadaGST5% ChinaVAT17% GermanyMWST19% UKVAT20% Most EU countries are around 20%11 How VAT WorksAlmost all VAT on all sales VAT on all sales VAT on all purchase the difference to the VAT authorities4 Pay VAT on the value that is VAT on the value that is addedVAT is accounted for on a balance account and is usually not a

8 On Transactions: Sample The UKPurchase from UK vendor 50,000 VAT 20%*10,000 VAT 20%10,000 Paid to UK vendor60,000 Sale to UK customer100,000 Sale to UK customer100,000 VAT 20%*20,000 Total collected120,000* VAT is not considered a cost or revenue: Accounted for on balance account13 VAT Declaration To The TaxVAT Declaration To The Tax Authorities And MarginVAT declaration:Collected VAT20,000 Less paid VAT-10,000 Due the tax authorities10,000 Due the tax authorities10,000 Margin:Revenue from customer100,000 Less cost50,000Mi50 000 Margin50,00014Bi Eik E VAT Rf d IVAT IN EUROPEB ritta Eriksson, Euro VAT Refund Houtzager, US VAT IN EUROPEVAT In The EU 27 member states No internal borders (somewhat similar to ) VAT is centrally coordinated - VAT directive Rules still vary from country to country.

9 A foreign company can register for VAT with no In The EU (Cont.)()VAT rates VAT comes in different rates. Typically, VAT jurisdictions have a standard rate, a lower rate and a zero rate. The average VAT rate in the European Union is about 20%. Rates of up to 25% (Denmark, Sweden) and 27% (Hungary) are common. Lower rates are for basic necessities (food, clothing). The zero rate often applies when goods or services leave the country. There are There are In The EU (Cont.)()When is VAT charged? VAT is charged on most goods and services sold to any customer within the seller s own EU country.

10 Example:UK Companies charges 20% UK VAT on most goods and services to all UK customers. VAT is not charged on certain sales:- VAT exempt or zero-rate products, financial servicesSales to Companies located in other EU countries or outside-Sales to Companies located in other EU countries or outsidethe EU (reverse charge). There are In The EU (Cont.)()VAT reverse charges Supply is taxable for VAT VAT is not levied from supplier but rather from buyer (business) BlfVAT Buyer self-assesses VAT Buyer reports on VAT return, claims the reverse-charged VAT as input tax on the same VAT return - no cash outlay in most countries Typical supplies covered: International services Intra-EU supplies of goods Certain domestic supplies (varies by country)1919 VAT In The EU (Cont.)