Public Business Support and Funding

TABLE OF CONTENTS PREVIOUS CHAPTER TAXATION NEXT CHAPTER 33 VALUE ADDED TAX (VAT) VAT is a consumption tax that the seller of goods or ser- vices will add to the price. The seller thus collects this tax from customers to remit it to the state. Liability to pay VAT concerns anyone who sells goods and services, rents out goods, or is engaged in similar commer- cial operations on an on-going basis. Goods are defined not only as tangible property, commodities, and goods but also electric power, gas, energy for heating, cooling and other similar purposes. The definition of services refers to everything else that can be supplied or sold in the course of business. VAT is payable each time a sale of goods or services occurs. However, VAT is designed to be paid by the consumer. For this reason, the seller has the right to deduct the input VAT of his purchases of goods and services for business pur- poses, if another VAT taxpayer has supplied them to him. In this way the VAT that is included in the actual consumer prices is only the VAT of the last seller in the supply chain. If a company operates a business for which VAT is pay- able, requesting for VAT registration will be mandatory. However, no registration is required if turnover for the ac- counting period (12-month) remains below €10,000. The company with turnover below €10,000 can voluntarily be VAT registered if it operates its business commercially on an on-going basis. Additionally, some sectors have been. left outside the scope of VAT taxation. These sectors are expressly listed in the legislature, and they include selling real estate and apartments or flats in housing companies, healthcare services, and social services. If a business company only sells these goods or services, it will not be deemed liable to pay VAT. RATES OF VAT IN 2021 24% General rate of VAT, effective for most goods and services 14% Food, animal feed, restaurant services, meal catering services 10% Books, medicine, services relating to physical exercise and sports, movies, entrance to cultural events and to entertainment events, transport of passengers, accommodation, and TV licenses. To figure out the amount to add to the net price, the seller should multiply the tax base (= the net price without VAT) with the applicable rate. Tax base is the price payable by the buyer, in which no VAT is included.

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