How VAT Works.
VAT is a tax on consumer spending. It is collected by VAT-registered traders on their supplies of goods and services effected within the State, for consideration, to their customers. Generally, each such trader in the chain of supply from manufacturer through to retailer charges VAT on his/her sales and is entitled to deduct from this amount the VAT paid on his/her purchases.
The effect of offsetting VAT on purchases against VAT on sales is to impose the tax on the added value at each stage of production – hence Value-Added Tax. For the final consumer, not being VAT-registered, VAT simply forms part of the purchase price.
In this scenario, your assoication collected 5000.00 EUR of VAT on sales and paid 1620.00 EUR of VAT on convention related supplies.
The collected must be paid out to the foreign tax authorites, but you are entitled to offset that amount with the VAT paid on supplies during the same period:
Note: This information is of general nature and is simply meant present the basic principals of the value added tax system. For specific information, please consult a foreign sales tax professional.