VAT exemptions apply to specific goods and services, often in the public interest, where no VAT is charged, and input tax cannot be reclaimed. Common exemptions include education, healthcare, financial services/insurance, charity fundraising, and certain land/property transactions. Unlike zero-rated items, exempt businesses cannot reclaim VAT on related costs.
To receive VAT exemption you need to have a long term illness or disability. For example, a physical or mental impairment which affects you being able to undertake activities, a condition which is considered to be a chronic sickness, such as disabilities or you are terminally ill.
VAT exemption can refer to either goods and services that are not subject to VAT or to organisations that cannot register for VAT. It's important for companies to make sure that their invoices contain the correct information about VAT – even if they're exempt.
Healthcare: Medical services, hospital care, and the supply of certain medical products may also be exempt from VAT. Financial services: Many financial services, like insurance and banking, are VAT-exempt. Charitable activities: Donations and activities carried out by registered charities may be exempt from VAT.
Some examples of VAT-exempt sectors include: Basic and Essential Goods: Sale or importation of agricultural and marine food products in their original state (e.g., fresh fish, vegetables). Educational Services: Services rendered by accredited private educational institutions and government educational institutions.
Your sale is VAT-exempt if it falls under Section 109 of the Tax Code, such as sales of certain residential properties, agricultural food products, educational and medical services. You do not charge VAT and cannot claim input VAT credits.
Common Types of VAT Exempted Supplies
You cannot reclaim VAT for: anything that's only for personal use. goods and services your business uses to make VAT -exempt supplies. the cost of entertaining or providing hospitality to people you do business with (for example theatre or sports tickets)
Exempt goods and services include many basic necessities such as food items, healthcare, and educational services. Unlike zero-rated goods, businesses dealing with exempt goods cannot claim a credit for the GST paid on inputs used to make these products.
Navigating VAT obligations can be particularly complex for online businesses, especially those selling across borders. Common mistakes—such as failing to register in the correct countries, applying the wrong VAT rates, or missing important filing deadlines—can lead to serious financial and legal consequences.
Agricultural products, tuition fees, lending operations, real estate, books, transportation and other necessities are typically VAT-exempt transactions.
VAT rates vary by EU country, typically set above a minimum of 15%, and can include reduced rates for certain goods and services. Implications for U.S. Consumers and Businesses: American travelers pay VAT included in listed prices in Europe but can reclaim it on certain purchases when leaving the EU.
Shipping your purchases home directly from the retailer is another way to avoid paying VAT, but the added cost may outweigh any savings. You can try to get your VAT refund through the mail but the process takes much longer and can be unreliable. Most people submit their requests at the airport on their way home.
What items are eligible for a VAT refund? Typical Recoverable Expenses are:
The government requires a simple declaration of your medical condition (or the condition of the person you're buying for). You must provide: the name and address of the person with the condition. the medical condition of the person eligible for VAT exemption.
Exempt goods and services
There are some goods and services on which VAT is not charged, including: insurance, finance and credit. education and training. fundraising events by charities.
There are two types of exemptions-personal and dependency. Each exemption reduces the income subject to tax.
Common Examples of GST Exempt Transactions:
Financial services – Most banking services, interest payments, and insurance premiums. Residential rent – Rental income from residential properties. Donated goods and services – Items or services that are given away without payment.
To get the product VAT free your disability has to qualify. For VAT purposes, you're disabled or have a long-term illness if: you have a physical or mental impairment that affects your ability to carry out everyday activities, for example blindness. you have a condition that's treated as chronic sickness, like diabetes.
Claiming VAT back - what you can claim for
Frequently asked questions
It lists agricultural and marine food products, fertilizers, seeds, livestock and poultry feeds, personal effects for those settling in the country, professional tools and instruments, and educational and medical services as exempt from VAT.
Costs that are exempt for VAT don't have VAT on them. Examples include: all services provided by a post office, such as postage and stamps. insurance and other financial services.