Exempt supplies
Supplies excluded from the tax are turnover on which no VAT is owed and for which at the same time no input tax deduction exists; they include medical treatment, education, social welfare, insurance and residential letting.
Definition
The missing input tax deduction is the expensive part: a medical practice or a school pays tax on all its purchases without recovering it. For some supplies voluntary taxation is possible — the option — which restores the deduction.
Excluded supplies must be distinguished from exempt ones: on export the turnover is exempt from the tax, but the input tax deduction remains. The terms sound similar and have opposite effects.
Where to read it
What the software must be able to do
You need a separate tax code for excluded turnover and an apportionment key for input tax where use is mixed. Practice, school and property software has to handle this; a generic invoicing program often does not.
Checked Aug 2026
More terms under VAT and customs: Acquisition tax Customs declaration Effective method Flat-rate VAT method Input tax Margin taxation Non-consideration Own use Place-of-recipient rule Reduction of consideration Takeaway 2.6 vs. eat-in 8.1 Value added tax VAT 3.8 % accommodation VAT 8.1 / 2.6 / 3.8 % VAT liability