As part of their invoicing, companies collect VAT on behalf of the Public Treasury. They deduct the VAT charged to them, and the difference is the actual VAT declared and paid in taxes.

However, there are companies that are not subject to VAT, which benefit from what is called a “VAT base exemption”. This concerns any company whose annual turnover excluding tax does not exceed:

• € 82,200 for retail and accommodation activities.
• € 42,900 for performers, certain copyright and certain regulated activities of lawyers.
• € 33,100 for service activities and liberal professions.

What are the consequences of an exemption from VAT?

What are the consequences of an exemption from VAT?

Being exempt from VAT means that the company does not pay all or part of the Value Added Tax. It therefore does not have to show VAT on its invoices, and does not need to complete specific monthly declarations.

The major drawback of an activity exempt from VAT lies in the fact that the company is excluded from the right to recover the VAT that it itself incurred when purchasing goods or services (except rare exceptions). Make use of the s corp tax calculator  in this case.

Scope of the exemption:

Companies whose activities are listed below are exempt from VAT.

There are three types of transactions exempt from VAT:

Transactions not subject by nature, for example:

• Medical & paramedical professions, health establishments, medical transport,
• Teaching activities,
• Operations carried out by organizations of general interest such as non-profit organizations of a social or philanthropic nature,
• Insurance operations, certain banking and financial operations,

Rental of bare buildings and rentals of furnished premises for residential use.

Transactions normally taxable but excluded by the legislator:

This second category mainly groups together export operations and intra – Community deliveries , in order to promote the competitiveness of products sold abroad.

Second-hand goods, works of art, collectibles and antiques

Under certain conditions, these categories are also exempt.

Other activities are concerned, for example games, betting or sports meetings.

In addition, although exempt, certain transactions give rise to the right to deduct, such as the international transport of goods. There can only be exemption if a text expressly provides for it. Thus, taxation is the rule and exemption the exception .

Sometimes, certain operations falling within the scope of the exemption may be imposed as of right or on option. This is sort of an exception within the exception.

Understanding VAT – Types of VAT regimes

What regimes for companies subject to the obligation?

There are several types of VAT regimes, so you are advised to check that you are applying the correct VAT depending on your business sector and turnover.