General principles of VAT Act

The rest of the rules are the same for companies and non-profit associations. If a non-profit association provides training services, it must be taken into account that only the following are exempt from tax: pre-school, basic, vocational, secondary and higher education, including learning materials transferred by the education service provider to the recipient of the services, private tuition relating to general education and other training services, except other training services provided for business purposes (clause 6 of subsection 1 of § 16 of the VAT Act).

For example, driving schools provide useful skills, but their services are not exempt from tax. In Case C-449/17 (concerning a driving school’s training service leading to a driver’s license for categories B and C1), the Court of Justice of the European Union ruled that this service is not tax-exempt.

If, in addition to the activities specified in its articles of association, a non-profit association is also engaged in business activities, it has the right to deduct input VAT only on expenses incurred for the purposes of taxable supply generated in the course of the business activities (subsection 4 of § 29 of the VAT Act). Upon deducting input VAT, a proportion of business activities (taxable supply) in the total activities of the association must be found. The method of finding the proportion can be chosen by the association itself, but it must correspond to reality. The tax authority will certainly disagree if a non-profit association calculates the proportion based on sales revenue and finds that the share of business in all its activities is 100% If this is indeed the case and the only activity of the non-profit association is business activity, then the association can not continue to operate as a non-profit.

Many non-profit associations are included in the list of non-profit associations, foundations and religious associations benefiting from income tax incentives. According to subsection 2 of § 11 of the Income Tax Act, the conditions for being included in this list include, inter alia, that:

• the association operates in the public interest; i.e. the objectives pursued relate primarily to the general interest of society and are not pursued in the interests of a narrow group of persons (e.g. members, founders, etc.) or in private interests. The association must act for the benefit of society as a whole or help those who cannot cope on their own.
• the association operates for charitable purposes, offering goods, services or other benefits primarily free of charge or in another non-revenue seeking or publicly accessible manner. The ‘publicly accessible manner’ does not mean that everyone should have access to the goods, services or other benefits offered by the association, but the majority, including people with a lower than average income in the area in which the association operates.

Pursuant to subsections 1 and 6¹ of § 12 of the VAT Act, taxable value is comprised of the sales price of the goods or services and anything else which is deemed to be fee that the transferor of the goods or the provider of the services has received from the purchaser of the goods, the recipient of the services or a third party for the goods or services, including accessory expenses, fees and taxes.

According to legislation, the annual tax on motor vehicles is paid by the owner or the authorised user of a vehicle. If the owner or the authorised user rents out the vehicle, they still have to pay the motor vehicle tax. It is one of the cost items that influences price formation and, where motor vehicle tax is added to the price of the goods or services sold, that price component is also subject to VAT.

Example

An authorised user rents out a car for 500 euros plus VAT. As of 2025, it was agreed that the price of the rental service would increase by the amount of motor vehicle tax.

The annual tax on the rented car is 360 euros, i.e. 30 euros for one month.

From 2025, the taxable value of the rental service is 530 euros and VAT must be added to the total amount.

Pursuant to subsection 9 of § 12 of the VAT Act, it is permitted to compensate exempt from tax only such expenses that have been incurred for someone else and are then compensated for.

Example

A private person leases a car (capital lease). The lessor and the lessee (the private person) have agreed that the registration fee of 1,000 euros shall be borne by the buyer, but the lessor shall first pay it and then collects it from the buyer.

In such a case, since the lessor incurred the cost on behalf of the buyer, the lessor does not have to add VAT to the claim for reimbursement of the vehicle registration fee submitted to the buyer and asks the buyer for 1,000 euros. The amount must be recorded in the accounts in a suspense account and the cost must be verifiable.

Additional information

It is standard practice for construction companies to set aside a certain percentage of the total contract value as so-called retention money, which is not payable until all work has been completed. The customer of the construction service pays this amount by the agreed-upon date after the warranty period has ended, which ensures that the contractor will repair any defects if necessary. The retention amount is a matter of mutual agreement and is not regulated by the Value Added Tax Act.

Pursuant to subsection 1 of § 12 of the Value Added Tax Act, the taxable value of goods or services is their actual sales price. The taxable value of a construction service – on which VAT must be calculated and declared in the VAT return – is the total price of the construction service; the so-called retention money does not reduce this value. The supply of the service is created when the service is provided (accepted), and the supply is created immediately for the full amount of the service price, regardless of the terms of payment. This means that even a retention amount for which a longer payment term has been granted does not reduce the taxable value of the service provided. The taxable value on the invoice is therefore the full price of the service, and the invoice may also indicate the agreed deadlines for instalment payments or what percentage of the price must be paid by which deadline.

If warranty work is performed during the warranty period, for example, to remedy defects, this does not create new supply because the retention amount, i.e. the full taxable value of the service, was also declared as supply. Therefore, if the need to repair something arises and the customer does not have to pay anything extra because everything is covered by the warranty, this is not new supply for the contractor. Instead, it is an expense incurred by the contractor. Input VAT may be deducted from the expenses incurred to repair the defects. The retention amount is paid to the contractor by the agreed-upon deadline. New revenue is generated if work is carried out that is not covered by the warranty and for which the client must pay an additional fee; a new invoice is issued for this.

On 1 August 2026, an amendment to the Electricity Market Act will come into force, under which the settlement of electricity accounts for certain persons will be transferred to a new system. As a result, the principles governing the calculation of both VAT and the excise duty on electricity will change for these persons.

General principles of electricity billing

The network operator and the electricity seller shall henceforth settle accounts with both consumers and electricity producers – who draw electricity from the network and feed it into the network – for the amounts of electricity net metered during trading periods. Electricity flowing in both directions between the network and the consumer or producer of electricity is metered and billed in this way only if there is a bidirectional electricity meter at the place of consumption (the network operator’s connection point).

A trading period lasts 15 minutes, and at the end of it, only one net metered amount is recorded: electricity drawn from the network (i.e. consumption) or electricity fed into the network. The net metered amount of electricity is determined during each trading period (i.e. for every 15 minutes) by comparing the metered amounts of electricity drawn from and fed into the network. If, during a trading period, more electricity is drawn from the network than is fed into it, the difference is treated as consumption for that trading period. If, during a trading period, the amount of electricity fed into the network exceeds the amount drawn from the network, the difference is treated as electricity fed into the network for that trading period.

The net metered amounts for each trading period are totalled at the end of each calendar month (e.g., in a 30-day calendar month, there are a total of 2,880 trading periods), resulting in two figures: the total amount of electricity drawn from the network during the calendar month (consumption) and the total amount of electricity fed into the network. These total amounts of electricity are not compared a second time (no new net metering takes place).

Calculation of taxable value and VAT when issuing an invoice to a customer from whom electricity is also purchased during the same period

When an electricity supplier issues an invoice to a customer who, in turn, sells electricity to the supplier, the cost of electricity, the transmission charge, the renewable energy charge, the electricity excise duty, the security of supply charge, the cost of balancing capacity, and VAT are calculated on the basis of a 15-minute trading period, as required by law. Consequently, in each 15‑minute trading period, only one of the parties has a net amount of electricity. The trading periods of the entire month are added together, and each month the producer and consumer continue to have two readings: consumption and generation.

For example, if a person sold 0.3 kWh of electricity during a 15-minute trading period and 0.1 kWh of electricity was sold to that person during the same period, then that person's net amount of electricity for the 15-minute trading period is 0.2 kWh, and the taxable value of the electricity seller’s supply, on which the VAT payable is calculated, is the selling price of 0.2 kWh of electricity for that trading period.

More information

Under subsection 11 of § 2 of the Value-Added Tax Act, intermediation (the provision of intermediation services) is the activity of a taxable person in the name and on behalf of another person.

To act in the name and on behalf of another person, at least the following requirements must be met:

1. the intermediary and the transferor or acquirer of the goods or the provider or recipient of the service have entered into a contract for the intermediation of the goods or service;
2. the transferor of the goods or provider of the service is liable for the transfer of goods or provision of service;
3. the goods are transferred or the service is provided at a price established or approved by the transferor of goods or the service provider under the terms and conditions established for the recipient of their goods or service;
4. only the commission fee is reflected in the accounts of the intermediary as supply of the intermediary;
5. where the invoice is issued to the recipient of the goods or services, it is issued by the transferor of goods or service providers or by another person, including an intermediary, on behalf of the transferor of the goods or service providers.

Where a person acts on behalf of another person but in his or her own name, then for the purposes of the Value-Added Tax Act this is not treated as intermediation. Instead, it is regarded as a resale of goods or services, in which case the full resale price is the taxable value of the supply.

Under Article 28 of Council Directive 2006/112/EC on the common system of value added tax, where a taxable person acting in his or her own name but on behalf of another person takes part in a supply of services, that taxable person is deemed to have received and supplied those services himself or herself (i.e. this is not an intermediation service).

In the case of electronically supplied services, this provision of the Directive is further clarified by Article 9a of Council Implementing Regulation (EU) No 282/2011. Article 9a provides that, where electronically supplied services are supplied through a telecommunications network, an interface or a portal such as a marketplace for applications, a taxable person taking part in that supply is presumed to be acting in his or her own name but on behalf of the provider of those services unless that provider is explicitly indicated as the supplier by that taxable person and that is reflected in the contractual arrangements between the parties.

To regard the provider of electronically supplied services as being explicitly indicated as the supplier of those services by the taxable person, the following conditions must be met:

• the invoice issued or made available by each taxable person taking part in the supply of the electronically supplied services must identify such services and the supplier thereof;
• the bill or receipt issued or made available to the customer must identify the electronically supplied services and the supplier thereof.

This principle also applies where telephone services provided through the internet, including voice over internet Protocol (VoIP), are supplied through a telecommunications network, an interface or a portal such as a marketplace for applications and are supplied under the conditions listed above. In addition, a taxable person who, with regard to a supply of electronically supplied services, authorises the charge to the customer or the delivery of the services, or sets the general terms and conditions of the supply, is not permitted to explicitly indicate another person as the supplier of those services.

A taxable person who only provides for processing of payments in respect of electronically supplied services or of telephone services provided through the internet, including voice over internet Protocol (VoIP), and who does not take part in the supply of those electronically supplied services or telephone services is not regarded as supplying the services in his or her own name.

Under subsections 1² and 1³ of § 4 of the Value-Added Tax Act, the following cases are also not regarded as the provision of intermediation services:

1. Where a person enables, within the meaning of the Consumer Protection Act, the distance selling of goods imported from a third country through an online marketplace in consignments with an actual value not exceeding 150 euros, the person holding the online marketplace is deemed to have acquired and transferred these goods by itself. The actual value is understood within the meaning defined in Commission Delegated Regulation (EU) 2015/2446 supplementing Regulation (EU) No 952/2013 of the European Parliament and of the Council as regards detailed rules specifying certain provisions of the Union Customs Code;
2. Where a person enables, through an online marketplace, the goods in the Community of a taxable person whose company has a registered office in a third country and who does not have a permanent business establishment in the Community, to be transferred to a person who is not registered as a taxable person or a taxable person with limited liability, the person holding the online marketplace is deemed to have acquired and transferred those goods by themselves.