Entities granted a VAT exemption based on their volume of intra-Community acquisitions that does not exceed the annual threshold established by their State of establishment are invoiced without VAT (VAT in the Member State of the supplier). However, even if their turnover is below this threshold, the person benefiting from an exemption scheme may choose to apply for a VAT number and be invoiced without tax (VAT). This is an option that becomes an obligation when this annual threshold is crossed.
Moreover, small businesses can benefit from special treatment which allows them to not charge VAT . In return they can not recover VAT paid on inputs. This scheme is applicable only below certain thresholds set by their State of establishment.
Finally, sales of goods to individuals or persons benefiting from the derogation (PBRD) established in another Member State of the European Union are charged VAT at the state of the seller , if a certain threshold by the recipient country is well respected. This threshold represents the amount of total annual sales by the supplier to private individuals and PBRD established in the Member State of arrival of goods.
The European Commission has just released the new thresholds that affect the application of VAT in all Member States on 1 March 2011.