What deductions should be taken into account?

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What deductions should be taken into account?

In all VAT/GST systems, the general idea is to relieve businesses from the burden of VAT/GST. Therefore, they can in principle recover the VAT/GST charged to them on their purchases. However, exceptions may exist. In particular when businesses make VAT/GST exempt supplies, it may occur that there is insofar no right of recovery of the VAT/GST on the purchases. This very much depends on the rules in the jurisdiction concerned. Also, in general, a right of recovery will be absent or will be corrected if goods or services are used for private consumption purposes of the entrepreneur or of his personnel. This is to safeguard that private consumption does not remain untaxed.

Non-resident companies incurring VAT/GST may also be eligible for a refund of that VAT/GST. However, thresholds may apply and certain expenses may be excluded from a refund. The rules differ substantially per country, even within the EU.[1]


  1. , Detailed guides on certain VAT topics (Vademecums) ' <http://ec.europa.eu/taxation_customs/taxation/vat/traders/vat_community/index_en.htm> (December 2015)

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Page contributors

link=http://www.pwc.nl www.pwc.nl
Bertjan Janzen
Tax Partner
Tim Kok
Senior Manager Indirect Taxes
Ad van Doesum
VAT Adviser / Professor
PwC / Universiteit Maastricht

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