VATexempt

VATexempt refers to goods and services that are not subject to value-added tax under a given regime. In most systems, supplies are categorized as taxable, exempt, or zero-rated. Exempt supplies do not have VAT charged on the sale, and businesses that primarily provide exempt goods or services generally cannot reclaim the VAT they pay on inputs used to make those supplies. Zero-rated supplies are within the VAT system but are taxed at a rate of 0%, allowing businesses to reclaim input VAT in most cases.

Common exempt categories include certain healthcare and medical services, education, social care, financial and insurance services, and some types of real estate transactions or cultural activities. Exemptions and their scope vary by country, region, and specific regulation, so the list of exempt items is not universal. Some jurisdictions also apply exemptions to charitable activities or public services.

Small businesses may be exempt from VAT registration or fall under special regimes if their turnover is below a defined threshold. Being VAT-exempt affects pricing and input costs: suppliers do not charge VAT on exempt Sales, and buyers who are VAT-registered may not recover input VAT tied to exempt supplies. Exemption status can influence cross-border trade, with exports often treated as zero-rated in many systems.

Overall, VAT exemption is a targeted relief within the tax system that reduces the VAT burden on certain goods and services, while leaving other activities subject to standard VAT rules. Jurisdictional rules control eligibility, scope, and administration.