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Wouldn't this be a business-to-business deal and hence no VAT is applied?

• sergiosgc 12y ago
  Of course VAT is applied. Businesses pay VAT, just like everyone. The key to understanding VAT is to focus on the value-added part. Businesses pay VAT on their purchases, charge VAT to their customers in their sales, and get a payback from the government equal to the difference of the two values. They thus pay VAT on the value they add to the economic flow. Every participant on the economic flow of a good pays their share of VAT, the whole good gets taxed in. Companies and individuals aren't different, except that individual consumers have no one to charge VAT to. They are the end of the line for the good or service.