Tax Rate

3.2. Tax Exempt Item 

Tax Exclusion Transaction

Tax exempt transactions are "transactions not subject to value added tax". Tax exemption transactions can be roughly divided into two categories. They are "tax exemption in which the pre-tax credit is permitted" and "tax-exempt transaction in which the pre-tax credit is not permitted". (Previous tax credit deduction)

① Exempt tax exemption for which a pre-tax credit is permitted

Tax exemption transactions for which a pre-tax credit is permitted are also called "tax exemption transactions". Exports and tax exempt shipments within the EU fall under this category.

[Case C] Export from Portugal's Company A to Japan Company B

Portuguese company A exports machinery equipment ($ 1 million) to Japanese company B.

→ Since exports are tax exempt, Japanese company B does not need to pay the European VAT. Since export is permitted for a pre-tax credit, Portugal's company A can deduct the value-added tax on the pre-stage on the purchase price of machinery and equipment.

②Tax exemption transactions for which a pre-tax credit is not permitted

Tax-free transactions for which a pre-tax credit is not permitted are roughly divided into those related to public interests, financial transactions, and real estate transactions.

1. Concerning public interests

(A) Public mail

(A) medical practice

(C) Provision of services at welfare facilities

(E) Tuition fee

(E) Activities by religious groups, etc.

2. Financial transactions, real estate transactions

(A) Insurance

(A) Money lending

(U) Transfer of land

(E) Land lease, etc.