Film Accounting Glossary
Value added tax
What is value added tax?
Also called VAT.
Value added tax (VAT) is a consumption tax charged on goods and services in the UK, EU, and many other territories, and a production registered locally can generally recover the VAT it pays on qualifying costs.
Recovery depends on having a properly constituted local entity, valid VAT invoices, and timely filings, so it is an administrative exercise rather than an automatic saving. An unregistered production shooting abroad simply absorbs the tax, which can be a fifth of local spend.
Example
A production registered in the UK recovers the VAT it pays on qualifying costs, given a properly constituted local entity, valid VAT invoices, and timely filings. An unregistered production shooting there simply absorbs it, which on £2.4M of spend is a substantial amount of money.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
An administrative recovery exercise handled by the local entity's accountants, not an automatic saving.
Common mistake
Assuming VAT is automatically recoverable. Recovery needs a properly constituted local entity, valid VAT invoices, and timely filings, or the tax is simply absorbed.
Related questions
- Can a film production reclaim VAT?
- Yes, where it is registered locally and holds valid VAT invoices, subject to filing on time. An unregistered production absorbs the tax as cost.
- How much does VAT add to a foreign shoot?
- It varies by country, but at typical European rates an unrecovered VAT cost can be a substantial fraction of local spend.