Insight June 2024
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BC&A
June 2024
Professional Association
- The challenge of managing the annual
budget -
Sources of funding for professional associations
The organization of the annual conference
Budget management
Spotlight: Sponsorship and VAT
In the complex world of professional associa-
tions, financial stability and sustainability are
paramount. These organizations, pivotal in fos-
tering professional development and industry
standards, rely on diverse funding sources to
support their missions and activities.
Conferences are the cornerstones of the life of
the professional association: They are crucial
sources of revenue for the success and growth,
and they are also the way to be recognized in
the industry.
Navigating the financial landscape is a multifa-
ceted challenge that requires expertise, fore-
sight, and adaptability. By leveraging diverse
revenue streams, maintaining robust financial
practices, and fostering strategic partnerships,
associations can ensure their financial health
and continue to serve their members effectively.
Detailed budget planning, continuous monito-
ring, and compliance with VAT regulations, are
essential. Effective cash flow management and
financial reporting ensure stability and transpa-
rency.
Sponsorship is an example of the complexity. It
provides visibility and financial support for as-
sociations. Effective sponsorship packages and
long-term partnerships are vital. Nevertheless,
VAT treatment is at the heart of the strategy;
successfully managed the VAT is not a charge,
and the total amount paid by the sponsor is
now a full revenue for the association.
By Oumar COUNTA, Director of the Tax De-
partment at BC&A.
Editorial
Sources of funding for professional
associations
Professional associations fund their annual budget through several
sources of revenue, which can vary depending on their size, sector and
membership base.
Membership fees are often the main source of income for many associa-
tions. Members pay an annual fee to receive association services, access
to exclusive resources, participation in discounted events, and other
benefits.
Some associations receive grants from governments or international or-
ganizations to carry out specific projects or to support their general mis-
sion.
Events and conferences and even workshops also generate revenue
through registrations, participation fees, exhibition fees, and sometimes
sales of educational or promotional materials on site.
Sponsorship and partnerships represent the majority of remuneration
generated by events. Companies or institutions may sponsor events or
other activities of the association in exchange for visibility and promo-
tion to the association's member base. These partnerships can also in-
clude long-term collaborations.
Finally, certain associations, particularly those with charitable status,
can receive donations from individuals or businesses. They can also or-
ganize fundraising campaigns to support special projects or their gen-
eral operations.
These sources of income contribute to the financial diversity of associa-
tions, allowing them to maintain and expand their activities while meet-
ing the needs of their members.
BC&A
How did you meet BC&A?
About 12 years ago. We had an American cli-
ent bringing a big international association
event to one of our French destinations. I had
just met BC&A’s Jean-François BENARD a few
weeks before. We clicked immediately and
were able to smooth complex tax issues for the
client. The operation was a success. The client
repeated its event 3 years later in the same
Venue. Naturally, BC&A was retained again by
the end client for the repeat business.
Do you believe VAT is a complex matter for
the organizer of an International conference?
Absolutely! Most of non-European organizers
barely grasp the complexity of tax issues on
European soil. Thus when they wake up 1-2
years after having signed the initial space
contract, everything has to be redone in order
to make sure they get a fair tax treatment at
event time. It doubles the red tape!
The organization of the annual conference
Very often, associations see VAT exemption as a major asset. On the
contrary, in the context of the organization of a conference, this sta-
tus has many disadvantages.
Yes, prices are invoiced without VAT (tickets, stand and sponsor-
ship). However, the association can no longer obtain a refund of VAT
on expenses (convention center, audio-visual, caterers, services, etc.).
Prices are therefore mechanically much higher to cushion the ex-
pense overload.
On the other hand, under the general VAT regime, the cheaper tick-
ets are invoiced with refundable VAT for professional participants;
and in most cases exhibitors and sponsors are applied the reverse
charge and therefore do not have to pay VAT.
As for the association itself, it will be able to use the reverse charge
mechanism and not have to disburse VAT on certain purchases made
for the conference. This is a great lever for cash flow.
Choosing the general scheme is a considerable asset because the ad-
ditional gain of around 20% or more of the expenses will be paid into
the association's annual budget.
The choice of the VAT statuts directly impacts the budget of the con-
gress or conference. Balancing the budget is crucial. Associations
must cover costs while keeping registration and related fees afforda-
ble for participants.
BC&A
Eric ABRAMSON
Director of Major Accounts and
International Development at GL
events Venues
How do you value the assistance of BC&A for
the organizer of an International conference?
I would definitely recommend BC&A. Their
assistance is of paramount importance. They
have a deep knowledge of the complexity of
European tax laws. My only advice? Work
with them from the onset of your event (i.e.;
contracts with the local suppliers to make sure
VAT will be recovered properly; without ha-
ving to redo the whole paperwork afterwards).
How complicated is managing the annual
conference budget?
For an association Congress is a highlight activ-
ity, and the entire team of volunteers and staff
are working towards this event on annual or
biennial basis. So, I would say preparing and
managing the congress budget is a primary and
most important task for a successful result.
Depending on the association structure, size of
the event, what services are outsourced, how
many partners and supplies are involved, etc. it
can become quite a complex matter.
What do you think is the weight of VAT in
managing the budget of an event?
To illustrate complexity of VAT I’ll tell you a
small story:
Several years ago, I was attending a VAT work-
shop in Brussels with my colleagues-CEOs. It
was designed for associations to explain the
basic rules of VAT and how associations can
manage VAT for events. I still remember one of
my colleagues saying after the end of the work-
shop: ‘I seemed to understand more about VAT
before entering this room, than after leaving it.’
I must confess we all shared the same feeling. A
simple answer is – no matter how much you try
to learn about VAT topic and manage it your-
self, it is always better to engage professionals.
Budget management
From an administrative and financial perspective, managing the
budget of an international conference presents specific challenges.
It is crucial to establish a detailed initial budget that takes into ac-
count all planned expenditure items, including hidden or less obvi-
ous costs. Negotiating and managing contracts with suppliers, ven-
ues, and partners is critical. It is important to secure favorable terms
and ensure agreements are respected to maintain the budget.
In that scope, it is mandatory to ensure that vendors provide valid
Legal invoices; this is the document that enables the association to
have the outgoing VAT reimbursed by tax authorities. Any breach in
the law makes the refund rejected.
Cash flow management is essential, as there can be a significant lag
between the moment when expenses are paid and revenues
(registrations fees, exhibition fees and sponsorship) are received. It is
necessary to ensure that the organization has sufficient liquidity to
cover operational costs at all times.
Continuous monitoring of spending against the planned budget is
vital. This requires regular budget updates and real-time adjustments
to avoid overruns. Regular financial reports must be produced for
transparency and especially for monitoring by internal and external
stakeholders, including sponsors and funding agencies. These reports
also help plan future conferences.
Compliance with local and international tax and financial regulations
is imperative. This includes managing VAT matters, tax reporting,
and compliance with international accounting standards.
After the event, it is essential to conduct audits and evaluations to
review financial performance and identify areas for improvement.
This information is crucial for the organization of future conferences.
BC&A
Zhanna KOVALCHUK
ESSKA Executive Director
Does hiring the services of BC&A seem rele-
vant to you given the challenge of budget
management?
We involved BC&A to manage our Congress
budget VAT exactly for the reason that we
needed a reliable partner, and as a bonus -
they specialize on Associations events VAT.
They might be quite rigid at work, but they
are certainly professional and know their stuff.
Spotlight: Sponsorship and VAT
Since there is no Legal text, the sponsorship can be
defined as a financial contribution to a cultural, artis-
tic, sporting, scientific, educational, entertainment or
similar event in exchange for acknowledgement that
will increase the notoriety and possibly improve the
image of the sponsor.
Sponsorship gives significant exposure to the spon-
sors’ targets, visitors and exhibitors, often profession-
als in the same field and, thus, potential clients.
Corner stone of the funding of an event like a con-
gress or a conference or a corporate, the sponsorship
is thus very important for financing the annual budget
of a not-for-profit Association.
While the annual memberships ensure some income
to keep the not-for profit associations alive, the in-
come of the events has a significant importance in
helping them achieve their goals.
What about VAT?
For Value-Added Tax (VAT) purposes, a ‘supply of ser-
vices’ shall mean any transaction which does not con-
stitute a supply of goods (EU Directive).
The sponsorship is a commercial operation. More spe-
cifically, it is a supply of advertisement services pro-
vided by the organizer of an event to the company
contributing to the organization of the event.
BC&A
Then, the question is: where shall the sponsorship be
taxable?
For sponsors with a business status (B2B)
According to the European regulations in force, the
general rule for the services applies whether the busi-
ness sponsoring an event is European Union based or
not. It means that the place of supply of the sponsor-
ship shall be the place where the sponsor has estab-
lished his fixed business receiving the said supply of
services.
However, if those services are provided to a fixed es-
tablishment of the sponsor located in a country other
than the one where he has established his headquar-
ters, the place of supply of those services shall be the
country where that fixed establishment is located.
To simplify, the sponsorship is most of the time sub-
ject to VAT in the country where the sponsor is estab-
lished.
When the sponsor is not established in the country of
the organizer, VAT is not charged and the sponsor self-
accounts the VAT in his country of establishment. This
is called the Reverse Charge Mechanism. It means that
there is no amount of VAT applied on the sponsorship
invoices issued by the organizer.
For instance, the organizer is established in Belgium
and the sponsor is VAT registered in Germany. The
German company has only an establishment in Germa-
ny and nowhere else. The organizer shall issue an in-
voice without VAT and the sponsor self-accounts the
VAT in Germany. No Belgium VAT is due on this sup-
ply.
On the other hand, when both the organizer and the
sponsor are established in the same country, the local
VAT must be charged on the supply of sponsorship
and paid to the Tax administration of their country of
establishment.
For sponsors without a business status (B2C)
If a European sponsor has no Intra-Community VAT
number, he will be considered as a non-taxable person
and the reverse charge cannot be applied. According
to the special rule for event related services supplied
to non-taxable persons, the sponsorship shall be sub-
ject to the VAT of the country where the event takes
place.
An Intra-Community VAT number is a number that
individually identifies the companies liable for VAT in
each EU Member State, whether they are established
in that country or not. That enables the company to
make business abroad from their country of establish-
ment. For instance, Spain or Italy are providing Intra-
community number only on request, it is not auto-
matically attributed, at the difference of an internal
VAT number. The internal VAT number are not regis-
tered in VIES which is a European system that enables
operators to check the validity of the VAT number.
If a non-European sponsor cannot prove its business
status, the place of supply of the sponsorship shall re-
main the place where he is established. This is due to
BC&A
the special rule on advertising services supplied to non
-taxable persons established outside the European Un-
ion Community.
This shall be applied to a US-based sponsor.
The specificity of the Sponsorship packages
Often, organizers are not only providing advertisement
on screen, bags, in the catalogue… but a whole package
including admissions on site, and/or meeting rooms.
Since admissions and meeting rooms are subject to
VAT in the country where the event is held, the reverse
charge cannot be applied on the whole sponsorship
package.
For the VAT paid on the services subject to local VAT,
the sponsors having a business status can submit a
VAT reimbursement request. Non-Europeans may
have to name a Tax Representative, in that regard.
What is the difference between Sponsorship and
Donation?
Donations are made by entities that contribute finan-
cially to non-profit organizations, for no consideration
in return and that are used to help the organizations
accomplish their goals and objectives.
Donations can be made to charities that operate exclu-
sively for religious, charitable, scientific, education-
al, or other specified purposes.
Since there is no service in return, these transactions
are not considered as commercial operations and they
are outside the scope of VAT. As consequence, no in-
voice shall be issued for these transactions.
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