Pro rata & partial exemption
Partial exemption and financial services business go hand in hand. For me it is critical to have a method that optimises recovery whilst still paying a fair share of tax, which remaining easy to operate and audit. Technology and automation can hugely reduce the burden upon business to operate these, whilst also showing to tax authorities that the method is used correctly.
My experience
At Adyen, I was responsible for applying the pro rata negotiation to the incurred VAT for the first time. Over the years, I worked with a number of stakeholders and external parties to map the restriction in our system, removing manual processes and resulting ultimately in a live calculation that enabled accurate provisions to be made.
I have also negotiated with Tax Authorities globally on existing partial exemption methods, and setting up methods in countries where Adyen was required to register. If VAT incurred is small, the focus should be on time-saving, with a fully automated, easy to operate method, integrated into the ERP system.
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​At KPMG I was responsible for the partial exemption special methods ("PESM") of a range of financial services businesses, including a major payment service provider, European central bank, a major housebuilder and a supermarket with a financial services entity attached. The methods were carefully drafted to ensure optimisation, alignment with their values and ease of use.