Colleagues,

My program is a commercially sponsored research program and we have
recently signed a subcontract with a Dutch non-academic institution
for them to perform scope-of-work research as part of our project.
The agreed-upon terms of the agreement state that no taxes, import or
export duties levied by any government against either us or our Dutch
subcontractor will be reimbursable.

The Dutch subcontractor's detailed budget proposal did not include
Value Added Tax (VAT), and if it had, we would have had them remove
it before we proceeded with the negotiation.

Now, several months later as they prepare to send us an invoice, they
want to add VAT in addition to their other allowable expenses.
Naturally, we have told them we will not pay VAT. Indeed, we cannot,
because our prime agreement forbids it, and the term flows down into
our subcontracts. They seemed to feel that it went without saying
that we would pay VAT in addition to other direct and indirect costs.

Has anyone else had any experience in resolving issues with European
or Dutch subcontractors involving VAT? Is this a problem with the
Dutch laws, or is it more widespread through the EU? Is there a
reasonable way of this other than cancelling their contract?

Help! Or perhaps I should cry "Hulp!"

Lee
****************************************************************
 Lee Wood (Mr.)
 Administrative Manager
-  Global Climate and Energy Project (GCEP)
 Stanford University
 416 Escondido Mall, Peterson Labs, Room 556T
 Stanford, CA 94305-2205
 Mail Code: 2205
(  Phone: (650)725-3226
 Fax:   (650)725-9190
 http://gcep.stanford.edu/
****************************************************************

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