Amer Sports has VAT receivables in 18 languages. Intrum Justitia speaks them all
Doing business across borders poses a number of challenges, not least of which is figuring out how to receive refunds on value-added tax. For some companies with lots of transactions within Europe, unpaid refunds can impact their balance sheets. Intrum Justitia's VAT Refund service provides them with specialized help with VAT registration, managing refunds and advice on other VAT-related issues within the EU.According to Eurostat, the statistical office of the EU, between three and four billion euro in unpaid VAT refunds is waiting to be claimed by businesses. The most likely reason they haven't done so is that the refund process differs by country. For companies to manage this requires time and resources, and without specialized expertise it is hard to succeed. In addition, they have to act quickly.
Cutting-edge expertise provides security
The safest way to get back the VAT on payments made in another European country is to hire a specialist. Intrum Justitia's business area, VAT Refund, offers companies a convenient way to collect from tax authorities in different countries. On average, Intrum Justitia recovers about 40 million euro annually for businesses throughout Europe. "Cutting-edge expertise in VAT issues can be hard to find, since it is a narrow niche. Having such a resource internally isn't profitable for companies, either," says Kari Rahko, who is in charge of the VAT Refund service within Intrum Justitia. Intrum Justitia's strength, in addition to its specialized expertise and size, is that it is a publicly listed company. Because of this, it is transparent and has taken a stand on ethical issues. This creates the security that companies need in order to entrust their invoices and the financial details of their businesses to an outside party. Especially in the case of those of Intrum Justitia's clients which are also public companies.
Customized treatment
VAT Refund started in Finland in1987 and has since been successfully launched in the rest of Europe. Today Intrum Justitia provides this service in nearly all EU member states, and to a total of 2,800 clients in 30 countries. Production and advisory services are still based in Finland and Estonia, where 35 people work. "We can give our clients the security of knowing that the job will be done right and on time, which makes the risk of errors and non-payment practically nonexistent. The timing aspect is especially important and is something many companies otherwise have trouble with," adds Kari Rahko. All EU languages are represented in Finland and Estonia. It is critical to be able to dialogue with clients and authorities in different countries in their own language. Besides building strong relationships with all the parties involved, this minimizes misunderstandings due to language barriers.
Service that creates growth
VAT Refund, continues to have good profitability potential. Through the service, Intrum Justitia gained 552 new international B2B clients in ten countries in 2008. "The successful expansion of VAT Refund in Europe has raised Intrum Justitia's previous status as a collection specialist for consumers and businesses to a new level," says Kari Rahko. The biggest clients for VAT Refund are the IT and telecom industries, transportation and manufacturing. The largest of the 9,500 assignments in 2008 was for Amer Sports Corporation, a sports equipment manufacturer with such brands as Salomon, Wilson, Atomic and Mavic. Amer has high marketing costs on a European level, as well as a large volume of potential VAT refunds. The assignment was carried out at Amer's headquarters in Finland and included refunds from 42 companies in 22 countries.
Although the VAT system is governed by an EU directive, VAT rates vary between 15 and 25 percent because each country is free to interpret the directive in its own way. Building an advanced bicycle can require parts from as many as ten different countries, all with different VAT rates. A handlebar from the UK, pedals from France and hubs from Germany mean three different VAT rates. For companies with various international customers and suppliers, the differences between countries can be problematic. Trying to figure out the rules on VAT refunds and understand which processes are used in different countries requires huge resources. Intrum Justitia's VAT Refund service helps these companies to operate across borders while staying focused on what they do best.
Although the VAT system is governed by an EU directive, VAT rates vary between 15 and 25 percent because each country is free to interpret the directive in its own way. Building an advanced bicycle can require parts from as many as ten different countries, all with different VAT rates. A handlebar from the UK, pedals from France and hubs from Germany mean three different VAT rates. For companies with various international customers and suppliers, the differences between countries can be problematic. Trying to figure out the rules on VAT refunds and understand which processes are used in different countries requires huge resources. Intrum Justitia's VAT Refund service helps these companies to operate across borders while staying focused on what they do best.
