What is VAT exempt?

Updated on May 30, 2022

Definition of a VAT exempt

Some sales of goods and services are exempt from the VAT taxation. Because certain goods and services are exempt from VAT, you won’t have to charge your clients for them and you won’t have to reclaim any VAT when you acquire them.

Any costs you incur when making exempt sales are not eligible for VAT return. Accountancy fees charged by a doctor’s office, for example, cannot be deducted from a doctor’s practice’s VAT refund.

It is not possible to register for VAT if all of your company’s sales are VAT exempt.

Do not mistake zero-rated VAT with VAT exempt sales. Sales with a VAT rate of zero percent are known as “zero-rated sales.”

Examples of VAT exempt goods and services

VAT is not applicable to a large number of medical products and services. Postal services are also exempt from VAT, so buying a stamp book is a VAT-free transaction.

Learn more about the various VAT rates in our in-depth resource.