PwC

Tax & Legal

VAT on trade fair charges to foreign exhibitors


The finance ministry has amended the VAT Act Implementation Decree to reflect the change in the law to treat exhibition charges to foreign businesses as a service rendered in the country of the recipient.

The Annual Tax Act 2010 included a number of changes to the VAT rules on the place of performance of services. In particular, exhibition charges will now be treated as a general service taxable in the country of the (business or, in most cases, public body) recipient, where they cover at least three other supporting services besides the rent for the stand or position. Supporting services include stand planning and erection, cleaning, guarding, office equipment hire, secretarial work, translations, publicity and transport of exhibits. The VAT Act Implementation Decree has now been amended accordingly. Of interest are the changeover provisions for exhibitions held in 2011, but for which advance payments from foreign exhibitors were called for in 2010. In principle, such charges become taxable in the country of the exhibitor and thus, in retrospect free of German VAT. Thus the organiser (trade fair company) should, in principle, reissue the advance payment invoice without VAT and refund the amount to the exhibitor. He should then include it as an adjustment in his next VAT return under the normal rules for corrected invoices. However, no objection will be taken to leaving the advance payments as they are with a full credit to the exhibitor on final settlement of the exhibitions costs, provided the organiser accounts for the VAT to the tax office and provided he actually received the advance payment before the new year.