What is VAT?

Value-added tax (VAT) is a consumption tax that the seller adds to the sales price of goods or services. All those who engage in the sale, rental, or comparable activity of goods or services as a business are liable for VAT.

The seller collects the tax from the buyer at the time of sale and pays it to the state taxation. In the OP Light Entrepreneur service, you do not need to pay the VAT yourself, as our service automatically collects VAT from each sale and pays it to the Tax Administration.

All users of the OP Light Entrepreneur service are automatically registered as VAT-liable. Therefore, all invoices must include VAT (except for industries that are exempt from VAT by law).

VAT Threshold Relief

As a VAT-liable person, you can deduct the VAT on expenses and are entitled to VAT threshold relief. If the turnover for a 12-month accounting period is less than 15,000 euros, you will receive all the remaining VAT as a threshold relief at the end of the year. Similarly, for an annual turnover of 15,000 - 30,000 euros, you will receive partial relief. The OP Light Entrepreneur service also takes care of calculating the threshold relief for you.

If your business's accounting period is longer or shorter than 12 months, the turnover for the period is converted to correspond to a 12-month turnover. This is done by multiplying the turnover eligible for relief by 12 and dividing this number by the number of months in the accounting period. Months are counted as full calendar months. In these situations, the turnover eligible for relief is calculated based on the proportionate length of the accounting period.

Learn more about VAT threshold relief.