European Union Value Added Tax - Exemption From VAT

Exemption From VAT

There is a distinction between goods and services that are exempt from VAT and those that are subject to 0% VAT. The seller of exempt goods is not entitled to reclaim VAT on business purchases, whereas the seller of goods and services rated at 0% is entitled. An example would be a book manufacturer in Republic of Ireland, who purchases paper including VAT at the 21% rate, and sells books at the 0% rate; the manufacturer would be entitled to reclaim the VAT paid on the paper as the business is making taxable supplies. In countries like Sweden and Finland non-profit organisations such as sports clubs are exempt from all VAT, and has to pay full VAT for purchases without reclaim. The EU commission want to abolish this and some other exemptions. There are objections from sports federations since this would create cost and a lot of bureaucracy for voluntary staff.