VAT or “value added tax” is charged on goods and services purchased by relocation companies and their clients. Many believe that VAT is applicable only in Europe when in fact this tax is common throughout the world. Currently, approximately 145 countries in the world have implemented a VAT or GST system, and the OECD has been known to say that “the spread of Value Added Tax has been the most important development in taxation over the last half-century” (OECD—International VAT/GST Guidelines. Centre for tax policy and administration—February 2006). Because VAT may have a significant financial impact on your business, regardless of its location or whether you are the client or service provider, it is important that managers in the relocation industry have a good understanding of what VAT is in order to avoid any unnecessary costs. Click here to read the Worldwide ERC® introduction to VAT taxes.
As organizations and transferees confront the realities of a slow and uneven housing market recovery, including longer home marketing times and negative equity positions, attaching a “sunset clause” to buyer value option programs can help manage the risks inherent in these properties languishing on the market.