How to Use VAT Benefits to your Advantage in Outsourcing and Shared Services
Whilst the salaries of employed staff do not carry VAT, VAT charges will normally arise on the salary element of the costs of the outsourcing or shared service provider as part of the service fee, and typically finance and insurance organisations can only recover a small proportion of VAT incurred. With UK VAT at 20% and rates of up to 25% elsewhere in Europe, the potential VAT cost is high. Accordingly, the increased VAT costs need to be set against the potential savings. If these VAT costs can be mitigated then the business case can be preserved..
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