4 Cash-Saving Hacks for the Pharmaceutical Industry

in Pharma Interest

It can be very easy to turn a blind eye to the fact that your pharmaceutical company might be losing thousands of potential tax savings every year associated with travel-related employee expenses, tooling and clinical trials – savings that are, in fact, rightfully yours.

This is because the worlds of both domestic and foreign VAT and tax recovery can be intimidating. There are several laws to understand. These laws can be complex and the process of seeking refunds can be confusing and burdensome.

There are various methods that can save your pharmaceutical company money that can be contributed to your bottom line. As a company who specialises in pharmaceuticals, you are not expected to know them all. Speaking to an industry expert can help you unlock the extra cash savings lying around your business. All you have to do is ask someone who knows how to find it.

Cash-Saving Hacks for the Pharmaceutical Industry

Here are 4 ways to save cash through VAT/Tax recovery:

  1. Recover VAT on travel-related employee expenses

Your pharmaceutical company can recover VAT through both Domestic and Foreign travel related expenses. While larger supplier invoices are by standard put through local VAT returns often local travel goes amiss due to its cumbersome volume. The same applies for the often more neglected foreign travel expenses. Your pharmaceutical company can recover VAT charged on accommodation, food, transport and mobile phone use.

  1. Recover VAT on Tooling

Tooling costs are incurred when acquiring the components and machines needed for production such as fixtures, injection moulding, gauges, cutting equipment and patterns.

Typically, a pharmaceutical company will design a medical product and based on their own design, they will order the parts for it from their supplier. Here’s the thing, the supplier who is capable of creating the machinery or parts to make the product are often not based in the same country as the pharmaceutical company. Instead of importing an entire machine to their country, the company will opt to keep the production machines or moulds in the country it was manufactured so it can continue to create the custom design parts that are then imported to the pharmaceutical company.

Tooling VAT can accumulate into the millions and can seriously contribute to your business’ profit.

  1. Recover Import VAT on Clinical Trials

This is another area where pharmaceutical companies have an opportunity to save money through VAT recovery. Import VAT is charged on any goods that are shipped to Europe for testing and trials. If a pharmaceutical company ships equipment DDP (delivered duty paid) to foreign countries, the seller bears all the costs in the destination country, which results in significant foreign tax charges. Combine these savings with the added bonus of VAT savings on colocation costs and importer of record services – and you can save you up to 70% on shipping costs.

  1. Clinical trial supplies or sourcing

Often a pharmaceutical company may be required to purchase certain drugs, comparators or supplies needed to conduct clinical trials. Should these items be sourced, purchased and possibly delivered within the EU or Australia, the VAT incurred on these purchased will attract VAT. This VAT is recoverable and can often add as much as 25% on the purchase.

If you think your pharmaceutical company is losing money as a result of unclaimed VAT on any of the areas discussed above speak to us today for guidance.

These are just some of the many ways that VAT IT can help your business save. VAT IT has always stood for maximising your savings; this allows you to get on with what’s important – growing your business.

[ppmaccordion][ppmtoggle title=”Contributor”]This article has been written by Selwyn Stein who is working as the Managing Directior of VAT IT (UK). You could reach him at selwyns@vatit.com.[/ppmtoggle][/ppmaccordion]

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