In practice, if your activity is exempt you issue invoices without VAT, but you must state on the invoice the reason for the exemption (the legal provision behind it). This applies, for example, to a physiotherapist, a regulated training centre or someone renting out a home.
The expensive nuance: most of these exemptions are "limited", meaning you charge no VAT but you also cannot deduct the input VAT linked to that activity, and if you mix exempt and non-exempt activities the pro rata rule kicks in. If someone told you that you can invoice without VAT because you earn little, read our guide on the 85,000 euro myth.
The typical mistake is deducting the VAT on a laptop or on office rent when all your activity is exempt: that VAT is just another cost and goes to expenses for personal income tax. It is also common to treat a similar activity as exempt when it is not, such as some non-regulated courses or wellness services.
It is linked to the pro rata rule, to non-subject transactions and to the annual VAT summary, where exempt transactions are reported. kontora lets you mark the exemption on each Verifactu invoice and carries it into double entry bookkeeping.
Related terms
Rather have this calculated for you?
kontora generates your tax forms box by box, tells you how much to set aside and reminds you before every deadline.