VAT Entrepreneur
If you independently run a business or practice a profession, you are in most cases a VAT entrepreneur. This means you must charge VAT to your customers, file VAT returns, and remit the collected VAT to the Tax Authority. At the same time, you can deduct the VAT you pay on business purchases (input tax). You are a VAT entrepreneur if you independently, regularly, and for compensation supply goods or provide services. This applies even if you are not an entrepreneur for income tax purposes. Small entrepreneurs can use the <a href="/en/glossary/small-business-scheme">KOR (Small Business Scheme)</a> and are then exempt from VAT filing.
Example
You're a freelance web designer and invoice €5,000 excluding VAT to a client. You charge 21% VAT = €1,050. You remit this €1,050 to the Tax Authority. At the same time, you paid €200 VAT on your laptop – you deduct that. So you remit €850.
Why does this matter?
As a VAT entrepreneur, you must file VAT returns on time and correctly, usually quarterly. Errors or late filing can lead to penalties and additional assessments. Consider the KOR if your turnover stays below €20,000 per year.
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