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Indirect Tax

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Indirect tax such as consumption tax, sales tax, value added tax (VAT), or goods and services tax (GST) is a tax that is levied on goods or services at the point of consumption. In most foreign jurisdictions, Stanford is not registered as tax-exempt organization. Therefore, certain revenue generating activities and/or the purchase of goods and services may be subject to indirect taxes. Such indirect taxes could have a negative impact on available program funds if not budgeted for appropriately. Advance planning is needed to determine the nature of goods and services being procured and the additional taxes that need funding.

Indirect Taxes Related to Revenue Generating Activities

Stanford projects or program activities in foreign locations generating revenue may expose the University to taxation in the country where the activity occurs. Even where no revenue is generated, Stanford may be subject to regulatory filing requirements. Revenue-generating programs may be required to collect and remit applicable indirect taxes based on the jurisdictional requirements where the customer is located. Such Stanford programs include executive education, online education, and other on-ground educational courses, etc. Indirect tax charges vary from country to country but typically fall between 5-27 percent. If there are VAT / GST obligations, the program / project would need to factor the cost into its activities. Actions which may need to be taken include:

  • Program model review;
  • Pricing and invoicing;
  • Communication to consumers; and
  • Resource needs for recording and reporting VAT / GST liabilities.

To report or remit the tax, Stanford would typically need to be registered with the appropriate tax authority. This function is performed by Global Business Services (GBS).

Value Added Taxes in Europe

Where Stanford provides electronically supplied services, in European Union (EU) Member States, there is a regulatory requirement to account for VAT on the services provided to EU non-business customers. In order to fulfill the EU VAT obligations, Stanford has opted to register for VAT under the special scheme for non-EU suppliers of electronic services, also known as the mini-one-stop scheme (MOSS), rather than register for VAT in each EU member state individually where Stanford does not have a presence. With this registration under MOSS, there is a requirement to charge VAT to EU non-business customers at the rate which applies in the customer's member state. The VAT collected will be paid over to HM Revenue & Customs in the United Kingdom as this is the place where Stanford has chosen to register for the MOSS from an administrative perspective.

Given that there are 28 European Union jurisdictions, this adds another layer of planning, administrative, and reporting complexity to projects. If there is a VAT obligation, then the program would need to budget for and communicate the liability with the potential customers.

Indirect Taxes Related to Payments or Expenses

Stanford projects or programs incurring expenses (e.g., travel) in some foreign jurisdictions may also be subject to VAT / GST charges. As indirect taxes increase the price of a good or service, it would be important to consider this when planning and budgeting for project costs.

VAT Filing and Recovery

The GBS team in partnership with other central offices is developing a University-wide strategy for identifying indirect tax requirements, particularly in the European Union, registering for VAT, filing applicable returns, and exploring the prospect of recovering VAT as applicable.

Additionally, in countries where Stanford University has a VAT registration, eligible supplies may qualify for input VAT recovery. Where VAT recovery is available, the GBS is in the process of leveraging on this.

VAT Registration Numbers

In EU member states, customers categorized as ‘Business’ or ‘Charity’ may be required to self-account for VAT using the reverse charge mechanism. For a determination to be made on whether the customer may fall into this category and hence not be charged VAT, the customer must supply their valid and accurate VAT number.

What's Next?

  • Indirect taxes could impact the cost of program or project services in certain foreign jurisdictions. Advance knowledge and planning for these additional costs is important for each project or program operating in a jurisdiction where this applies.
  • GBS is responsible for managing, remitting, and reporting of VAT and other indirect taxes. However, information is needed from the programs and projects operating in the countries noted above for reporting purposes. Programs and projects operating in the countries listed above should contact GBS for further information.
  • Stanford University is working on an institutional level strategy for VAT recovery on supplies in certain foreign jurisdictions. This effort is led by GBS. More information will be shared when available.