Small Business Exemption

    An exemption from VAT for businesses below a certain revenue threshold.

    Definition

    Many EU countries offer a small business exemption (sometimes called Kleinunternehmerregelung in Germany) that allows businesses with turnover below the national threshold to avoid charging and collecting VAT. However, these businesses also cannot reclaim input VAT on their purchases.

    Related Terms

    VAT Threshold
    The revenue level at which VAT registration becomes mandatory.
    VAT Registration
    The process of obtaining a VAT identification number.
    VAT (Value Added Tax)
    A consumption tax levied at each stage of the supply chain.

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