VAT exemption scheme for small businesses

VAT exemption scheme for small businesses

  • What exactly is the VAT exemption scheme?

    You are exempt from most VAT obligations. Specifically, you do not have to:

    • submit periodic returns,
    • charge VAT to your customers,
    • pay VAT to the Treasury.

    On the other hand:

    • you must submit a declaration of commencement, modification or cessation of activity,
    • you must submit a declaration of intra-Community supplies for the intra-Community deliveries and services which you provided,
    • you remain subject to VAT and must therefore have a VAT identification number,
    • you do have certain obligations with regard to invoicing, accounting, etc.,
    • you may not deduct VAT,
    • you must submit a list of your customers,
    • you must submit a special VAT return in cases of intra-Community acquisitions or services for which you are liable for VAT.

  • For whom is the VAT exemption scheme intended?

    You are eligible for the VAT exemption scheme if your business’s annual turnover does not exceed EUR 25 000 (excluding VAT). It does not matter what legal form your business takes (natural person, company, etc.).

    Please note! VAT units and certain sectors (construction work, catering, the supply of old materials) are excluded from this scheme. Certain transactions are also excluded from this scheme (but the business concerned can benefit from this scheme for all its other transactions).

  • How to apply for the VAT exemption scheme for small businesses?

    Existing business

    You must apply for the exemption scheme with your competent team Management. There are two possible dates on which the scheme comes into effect:

    • 1 July: you must apply before 1 June
    • 1 January: you must apply before 15 December


    New business

    When you commence your activity, you must submit a request for registration for VAT purposes (form 604A). You must determine your VAT scheme on the basis of your estimated turnover (excluding VAT) and your activity. If you wish to opt for the VAT exemption scheme and you meet the conditions, indicate your choice on form 604A.

  • How do I re-enter the VAT exemption scheme after changing my VAT scheme?

    When you leave the VAT exemption scheme, you can only return to it from 1 January of the third year following your change of scheme.

    Example

    As an exempted taxable person, you have changed your VAT scheme to submit quarterly returns from 1 July 2021. You will only be able to switch back to the VAT exemption scheme from 1 January 2025.