VAT Exemption – What is VAT Exemption | Ex Online Calculator

VAT exemption is a term that is used for all the goods and services that are not concerned with VAT or to all those particular organizations that are not eligible for VAT. It means that if you sell any goods or services to your customers, you will be not bound to charge them VAT, or even in case of buying from that, VAT will be exempted from the deal.

As we all know the majority of the products or services that are sold are subjected to VAT, However; there are some particular goods and services that are not eligible for VAT including the products that are not taxed are exempted from VAT.

If you are still having confusion while understanding vat exemption, then let us share a live example with you that will give you a better understanding of vat exemption. Charity organizations or NGOs are often exempted from VAT in many countries, Moreover; some particular businesses that sell those products only that are exempted from VAT are considered vat exempted businesses.

What Type of Goods & Services are VAT Exempted?

Even though most of the goods are not vat exempted, however; still there is a wide range of goods that are not eligible for VAT such as…

  • Sports-related goods.
  • Self Help or Physical education.
  • Some particular medical treatments.
  • Insurance and investments.

Remember, all the goods and services are exempted from VAT are also not applicable for tax. The sellers and buyers of these vat exempted goods are not bound to include vat in the total price of items that are sold or bought. Moreover; there is also no need of keeping the record of VAT Exempted sales as it’s not required or considered an illegal activity.

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What Does VAT exemption Means for a Business?

If a business only supplies vat-exempted items, then it’s considered vat-exempted and it cannot be even registered for VAT despite making requests to the concerned authorities by the business owner.

A business that is exempted from VAT is not accountable for

  • Not keeping the vat records.
  • Not submitting the vat returns.
  • Not eligible for vat reclaims.

VAT Exemption for Charities and Non-profit Organizations

All the charities and non-profit organizations are subjected to vat exemption and they can also get vat exempt certification from the concerned taxation department.

However; some charities can be registered for VAT if they exceed the VAT threshold but even in that condition, they will be only taxed for the goods and services which they sell. Otherwise, VAT is not applicable.


We hope you have now understood the actual meaning of the VAT tax exemption after reading our detailed article. Remember, there are some similar terms that may confuse you with vat exemption, you should be careful before making any decision regarding your business. It’s better to discuss everything with any legal or financial expert because VAT rules are different in every country. If you still have any question in your mind, don’t hesitate to contact us.

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