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Clients are keen to optimize their VAT positions, often utilizing special licenses to avoid input VAT charges. These licenses can exempt purchases from VAT, but they come with specific conditions and risks that require careful management. Michelle Lang introduces experts Tara Doyle and Nazar Zaidi, who emphasize the importance of correctly operating these licenses to avoid penalties. Meridian offers solutions to help clients monitor license thresholds and manage VAT treatment effectively, including automated processes to streamline compliance. The video also highlights the complexities of the audit process for VAT refunds and the necessity of maintaining accurate documentation.

Many of our clients are always looking at ways to optimize their VAT position and reduce the amount of input credit that they incur, particularly in countries where the refund process can be quite lengthy.

Clients would often look to use, special licenses which remove input credit or input VAT being charged, by their suppliers.

In certain EU member states like France, Italy, and Ireland, there is the use of these special licenses. However, there's a lot of conditions, criteria attached to it, and there's a lot of risk also, so it's important that the license is operated correctly.

When you have a business trading in a member state and that business makes high value purchases, be that domestic purchases or be it imports of goods, it's possible that larger amounts of input VAT for refund can accrue. And as you mentioned yourself, the audit process can be quite arduous, and it can take a lot of time.

So in order to alleviate this, some member states introduce what they call a special license. Now the special license allows the holder of the license to purchase up to usually a specific threshold from his supplier without that supplier having to charge VAT. So if we have a look at our example, we have an Italian supplier selling to an Italian customer, but that customer holds a special license. And up to the value of the license, the holder is allowed to purchase without any VAT being charged to him.