In most EU countries you can apply for a special scheme that enables you to trade under certain conditions without the need to charge VAT. If your company makes taxable supplies of goods or services below a certain annual limit, it may be exempt from VAT. This means you will not pay VAT to the tax administration but you will then not be able to deduct the input VAT or to indicate VAT on invoices. You may — if you choose — voluntarily opt for the normal VAT arrangements, in which case you must pay VAT and, consequently, can deduct the input VAT.
Be aware that these limits or thresholds vary from country to country and special conditions may apply. In some countries, there is no VAT exemption for small enterprises and you must register as soon as you make any taxable sales.
The scheme does not apply for:
- sales by businesses based in other EU countries
- occasional economic activity
- exempt sales of new means of transport to customers in another EU country
- any other transactions as defined by EU country.
Source EU
