VAT & Small Businesses
Special VAT Exemption Scheme for Small Businesses: Who Can Join and What They Lose
Published · 9 min read · NS Accounting & Tax Office
Written by the NSTAX team of accountants and tax advisers
For a self-employed professional or a very small business, the obligation to charge and remit VAT can be more of a burden than a tax. This is why the law provides a special exemption scheme for businesses with very low turnover, recently reformed in line with European legislation. However, exemption is not always in the business owner’s interest: members of the scheme do not charge VAT, but cannot deduct the VAT on their purchases either. In this article, NSTAX explains who can join, the thresholds, what you gain, what you lose and when it is genuinely worthwhile.
What Is the Small Business Scheme?
The small business scheme (Articles 44a, 44b and 44c of the VAT Code, implementing Directive (EU) 2020/285) allows businesses with very low turnover to exempt their supplies of goods and services from VAT. Any person taxable for VAT is eligible, regardless of legal form: self-employed professionals, start-ups and companies. Joining is optional and aims to reduce compliance obligations for very small businesses.
See the AADE guidance on the small business scheme.
The Two Thresholds: €10,000 in Greece and €100,000 in the EU
The scheme operates with two different turnover thresholds:
- Domestic threshold of €10,000: for a business to belong to the scheme in Greece, its annual turnover within the country must not exceed €10,000 in either the current or the previous year
- Union threshold of €100,000: to qualify for exemption in other EU Member States too, the business’s total turnover across the EU must not exceed €100,000 (current and previous year), and turnover in each Member State granting exemption must not exceed its respective national threshold
Greece retained the national €10,000 threshold for domestic transactions. A business may apply the domestic and cross-border schemes in parallel, provided it meets the conditions for both. The cross-border scheme has applied since 1 January 2025, while the relevant AADE application platform has operated since 28 January 2026.
For cross-border sales, also see our guide to e-shops and e-commerce.
What You Gain and What You Lose
What you gain:
- You do not charge VAT to customers, so your prices are not increased by 24%
- A smaller administrative burden, as the exemption reduces VAT compliance obligations
- You do not need to remit VAT to the tax authority
What you lose:
- You have no right to deduct input VAT, meaning the VAT paid on your purchases and expenses, which becomes a real cost
- You have no right to a VAT refund
- The exemption applies until you exceed the thresholds, after which the business moves to the standard scheme
When It Is Worthwhile and When It Is Not
The answer depends mainly on who your customers are and how much VAT you pay on expenses:
- It usually benefits you when your customers are private individuals who cannot deduct VAT and your expenses carrying VAT are low
- It is less beneficial when your customers are businesses that deduct VAT, because their net cost is the same whether you charge VAT or not, while you lose the VAT on your purchases
- It is less beneficial when you have high expenses carrying VAT, such as equipment or consumables, as the VAT on these expenses is not deductible
If you do not wish to use the scheme, you may remain in the standard scheme. The right choice is worth making from the outset, based on your actual figures.
What Happens When You Exceed the Threshold
When turnover exceeds the €10,000 threshold, the business must move to the standard VAT scheme. AADE’s guidance provides a characteristic example: a business that had joined the scheme and exceeded the threshold was required to move to the standard scheme from 1 September 2025. If its domestic turnover for the whole of 2026 stays below €10,000, it may rejoin the special scheme from 1 January 2027. The change has practical consequences: from the date of transfer, the business must charge VAT, file returns and have prepared its invoicing systems.
Also see the VAT changes for businesses.
What Does Not Change
The exemption concerns VAT exclusively. The business’s other tax and social insurance obligations remain: keeping accounting books, issuing lawful documents, income tax and social insurance contributions. Certain activities and transactions may also be excluded from the scheme, so eligibility must be checked case by case.
See the calendar of business tax and accounting obligations.
Comparison Example: The Same Professional, Two Different Customers
Assume a self-employed professional with annual turnover of €9,000, below the threshold, and expenses of €2,000 plus 24% VAT, meaning €480 in VAT and €2,480 in total cost.
Case A: Customers are private individuals and €9,000 is the final price
- Under the special scheme: revenue €9,000 − cost €2,480 = €6,520
- Under the standard scheme: the €9,000 price includes VAT, so the net value is €9,000 / 1.24 = €7,258.06 and VAT is €1,741.94. VAT payable is €1,741.94 − €480 = €1,261.94 and the net result is €7,258.06 − €2,000 = €5,258.06
- Difference in favour of the special scheme: €6,520 − €5,258.06 = €1,261.94
Case B: Customers are businesses that deduct VAT
- Under the special scheme: you invoice €9,000 without VAT and the result is €9,000 − €2,480 = €6,520
- Under the standard scheme: you invoice €9,000 plus €2,160 VAT, remit €2,160 − €480 = €1,680 and the net result is €9,000 − €2,000 = €7,000
- Difference in favour of the standard scheme: €7,000 − €6,520 = €480, exactly the purchase VAT that is lost. For the customer, the net cost is the same in both cases.
The amounts are hypothetical and use a single 24% rate for simplification.
The Most Common Mistakes
- Joining the scheme without comparing it with the standard scheme, especially when customers are businesses and expenses carrying VAT are significant
- Issuing invoices with VAT while the business belongs to the scheme, or the reverse
- Monitoring turnover only at year-end, although exceeding the threshold triggers a transfer within the year
- Assuming that exemption from VAT also means exemption from other tax obligations
- Deducting input VAT by a business that belongs to the special scheme
- Failing to prepare invoicing systems before leaving the scheme
5 Practical Tips
- Before joining, calculate the VAT on your annual purchases and compare it with the VAT you would charge customers.
- Monitor turnover month by month rather than only at year-end, so you do not exceed the threshold unexpectedly.
- If your customers are mainly businesses, first consider whether the exemption genuinely benefits you.
- Prepare your invoicing system early for a possible transfer to the standard scheme.
- Ask your accountant to check whether your activity is excluded from the scheme.
Frequently Asked Questions
What are the thresholds for the small business scheme?
Can I deduct VAT on my purchases if I belong to the scheme?
Is joining the scheme compulsory?
What happens if I exceed the €10,000 threshold?
Can I apply the domestic and cross-border schemes in parallel?
Not Sure Whether VAT Exemption Benefits You?
NSTAX, an accounting and tax advisory firm in Athens, compares the special and standard schemes using your own figures, so you can choose based on the real impact on your pocket. Contact us before joining or if you are approaching the threshold.
Explore NSTAX business services too.
The thresholds and conditions of the small business scheme are based on the current framework and AADE guidance and may be amended. The example is indicative and uses a single 24% VAT rate for simplification. For an accurate picture of your own business, contact us.