What exactly is the VAT exemption scheme?
It is a simplified scheme for small entrepreneurs with an annual turnover below €25,000. You do not charge VAT, cannot reclaim VAT and do not have to file quarterly VAT returns.
VAT exemption scheme: an advantageous option for your business?
09/09/2025
If your annual turnover remains below 25,000 euros, you may be eligible for the VAT exemption scheme for small businesses. At first glance, the formula seems appealing: no quarterly VAT returns, lighter administration and no VAT to charge. However, this simplification is not always the most advantageous solution. It all depends on your activity, your clients and your professional expenses.
What is the VAT exemption scheme?
The VAT exemption scheme is intended for small businesses whose annual turnover does not exceed 25,000 euros.
If you choose this scheme:
• you do not charge VAT to your clients
• you cannot recover VAT on your purchases
• you do not have to submit quarterly VAT returns
Administrative management is therefore simpler. From a financial perspective, the benefit mainly depends on the type of clients you work with.
In which cases can this scheme be interesting?
The exemption scheme is often interesting when your clients are mainly private individuals.
Private individuals generally look at the final price they have to pay. Since they do not recover VAT, an invoice without VAT can make your offer more attractive.
Let’s take an example.
You are a photographer and offer a photo session at 400 euros excluding VAT.
With the standard VAT regime, your client pays 484 euros (400 euros plus 21% VAT). You then remit 84 euros to the authorities.
With the exemption scheme, your client pays 400 euros. You keep this amount.
The absence of VAT administration can also represent a significant time saving, especially when starting a business.
In which cases is the scheme less advantageous?
The situation is different if you mainly work with companies.
Professional clients generally reason in prices excluding VAT, since they recover VAT on their purchases.
Let’s take an example.
You invoice a consulting assignment of 1,000 euros.
With the standard VAT regime, your client pays 1,210 euros but recovers 210 euros of VAT. The real cost therefore remains 1,000 euros.
With the exemption scheme, the invoice is 1,000 euros. For your client, there is no difference.
However, for you, the impact can be significant. Under this scheme, you cannot recover VAT on your own professional expenses. If you regularly invest in equipment, software or external services, this lack of VAT recovery can increase your costs.
Certain activities cannot benefit from the scheme
The exemption scheme is not available for all activities.
Certain sectors are excluded, including some activities related to construction or cleaning. Before making your choice, it is therefore important to verify whether your activity can actually benefit from this scheme.
Making the right choice for your business
The exemption scheme can simplify administrative management and reduce prices for private clients. In other situations, the standard VAT regime remains more advantageous, particularly if your activity generates significant expenses with VAT.
A fiscal choice of this type deserves to be analysed based on your actual situation.
PIA Go! supports entrepreneurs who operate with or without the exemption scheme and can help you evaluate the most suitable option for your business.
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FAQ
How much turnover can I have to use the scheme?
You may have a maximum annual turnover of €25,000. If you exceed that amount, you must switch to the standard VAT system.You may have a maximum annual turnover of €25,000. If you exceed that amount, you must switch to the standard VAT system.
When is the scheme interesting?
Especially if your customers are mainly private individuals. They focus on the final amount and cannot reclaim VAT anyway.
4. Wat is het voordeel voor mijn particuliere klanten?
You can offer them a lower price because you do not have to charge 21% VAT. For them, that feels more advantageous.
When is the scheme less interesting?
If you have many business customers. They can deduct VAT, which means your invoice costs them the same with or without the exemption.
Can I reclaim VAT on my business expenses under the exemption?
No. You cannot reclaim VAT on purchases such as a laptop, office supplies or services. This makes the scheme less advantageous if you have many expenses.
Does the scheme apply to all sectors?
No. In certain sectors, such as construction or cleaning, you cannot apply the exemption.
Do I still need to file VAT returns under the exemption?
No. One major benefit is that you no longer have to file quarterly VAT returns. This saves you time and administration.
Are my income earnings still taxed if I choose the exemption?
Yes. You still pay income tax on your profit, but you no longer have to pay VAT to the tax authorities.
Can PIA Go! help me choose between the exemption and the standard VAT system?
Absolutely. PIA Go! supports both systems, and our experts give you tailored advice so you can make the most advantageous choice for your business. Your plan determines how much we take off your hands. You choose what suits you best.
Written by Charlotte Backelandt , Marketing & Content Specialist,
reviewed by Tom Castelein, Personal Income Tax Expert.
reviewed by Tom Castelein, Personal Income Tax Expert.