The expert's eye
The correct determination of a VAT status of an Association is crucial in two ways :
- A correct determination of the VAT status allows to consider the extent of the deduction right; i.e. the VAT percentage the organization can deduct on the costs she bears for its activities.
- A correct determination of the VAT status also allows to take the potentially necessary steps in order to prevent “bad surprises” during a potential administrative VAT audit. Nowadays, the NPO’s are indeed more and more audited by the fiscal authorities.
The correct determination of the VAT status of an association cannot be improvised. A professional and methodical approach to VAT is essential to clarify the VAT status because it depends on several parameters that are specific to each association.
Therefore, getting advice on such a complex matter can sometimes help to avoid many setbacks.
VAT errors, even if made in good faith, can put the association's finances in serious danger. In that scenario, the association's director or accountant (internal or external) could be held liable.