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A list of four ways the pharma industry can save money on travel-related employee expenses regarding VAT on clinical trials, clinical trial supplies, sourcing, and more.
It can be very easy to turn a blind eye to the fact that your pharmaceutical company might be losing thousands of potential tax savings every year associated with travel-related employee expenses, import VAT on clinical trials, and clinical trial supplies or sourcing-savings that are, in fact, rightfully yours.
This is because the worlds of both domestic and foreign VAT and tax recovery can be intimidating. There are several laws to understand and these laws can be complex and the process of seeking refunds can be confusing and burdensome.
There are various methods that can save your pharmaceutical company money that can be contributed to your bottom line. As a company who specializes in pharmaceuticals, you are not expected to know them all. Speaking to an industry expert can help you unlock the extra cash savings lying around your business. All you have to do is ask someone who knows how to find it.
Here are three ways to save cash through VAT/Tax recovery:
Your pharmaceutical company can recover VAT through both domestic and foreign travel-related expenses. While larger supplier invoices are by standard put through local VAT returns, often local travel goes amiss due to its cumbersome volume. The same applies for the often more neglected foreign travel expenses. Your pharmaceutical company can recover VAT charged on accommodation, food, transport, and mobile phone use.
This is another area where pharmaceutical companies have an opportunity to save money through VAT recovery. Import VAT is charged on any goods that are shipped to Europe for testing and trials. If a pharmaceutical company ships equipment DDP (delivered duty paid) to foreign countries, the seller bears all the costs in the destination country, which results in significant foreign tax charges. Combine these savings with the added bonus of VAT savings on colocation costs and importer of record services-and you can save you up to 70% on shipping costs.
Often a pharmaceutical company may be required to purchase certain drugs, comparators, or supplies needed to conduct clinical trials. Should these items be sourced, purchased, and possibly delivered within the EU or Australia, the VAT incurred on these purchases will attract VAT. This VAT is recoverable and can often add as much as 25% on the purchase. Furthermore, tooling costs are incurred when acquiring the components and machines needed for production such as fixtures, injection moulding, gauges, cutting equipment, and patterns. Tooling VAT can accumulate into the millions and can seriously contribute to your business’ profit.
If you think your pharmaceutical company is losing money as a result of unclaimed VAT on any of the areas discussed above, speak to us today for guidance.
Selwyn Stein is Managing Director of VAT IT and can be reached at email@example.com