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Practical Handbook VAT 2022

F) Exempt operations

These are supplies of goods or services which constitute the taxable event, but for which the law states that they should not be subject to taxation.

At VAT there are two clearly differentiated types of exemptions:full exemptions and limited exemptions.

In the case of the full exemptions, the trader or professional who makes the supply and who does not charge the tax is allowed to deduct the input VAT on the purchases related to the exempt transaction, provided that he meets all the requirements for deduction.Full exemptions are those applicable to exports and similar operations, operations relating to free zones, free warehouses and other warehouses, customs and fiscal regimes and intra-Community supplies.

In the case of the limited exemptions the supply of the good or service is exempt, but the VAT borne by the entrepreneur or professional on the acquisitions related to the exempt transaction is not deductible.

  1. Exemptions in internal operations
  2. Exempt deliveries of goods and provision of services in connection with external and similar operations