Value-added tax (VAT) is a consumption tax assessed on the value added to goods and services at each stage of production. Catalant can't advise whether or how VAT applies to a particular transaction and encourages experts to consult their own tax advisors in determining how to handle any tax liability. However, most countries around the world (with the major exception of the US) use a VAT system, so experts located internationally are likely required to collect and pay VAT.
If and when an expert determines VAT is applicable on a given project, Catalant can help facilitate the documentation, invoicing and payment of VAT through the following steps.
1. Estimate VAT Upfront
Experts must estimate any expected VAT charges in the VAT line item of the proposal form in the Fees and Expenses section. VAT should be calculated as a percentage of the expert fee (not inclusive of any Catalant fees) and according to the appropriate exchange rate dictated by the VAT laws of the given jurisdiction. All amounts should be calculated and stated in USD.
Any VAT amounts estimated in an approved proposal will automatically be included and listed in the project agreement with the client.
2. Submit VAT Invoices for Payment
Once a project kicks off, an expert can request approval for payments according to the agreed-upon schedule from the proposal. When requesting payment for project fees, the expert must simultaneously submit VAT in the Payments tab by clicking Submit Expenses or VAT Invoice and selecting the "VAT Invoice" toggle. The expert must provide the amount and complete Catalant's VAT invoice template (available in the modal in the platform and attached to this help article) with the client's billing information before submitting for approval.
Once submitted, the Client will receive an email indicating they need to approve payment, which they approve in platform just like any other project fee or expense. As a reminder: Catalant will pay out these exact amounts to experts in USD, and experts are responsible for any bank fees or exchange rate fluctuations.