VAT as an eligible expense is a question that determines whether the project budget is planned in amounts including tax or excluding it. The basic rule is: value added tax is an eligible expense only if the recipient cannot recover it by any means, that is, if they have no right to deduct it. A person not registered for VAT therefore usually draws up the budget in prices including tax, while a person registered for VAT with full right of deduction plans in prices excluding tax and deals with VAT through the tax return. The situation is more complex for entities with a proportional right, which apply a coefficient – only the non-deductible part is eligible. Status is documented by a declaration and verified in the register of VAT payers. If you become a VAT payer during implementation, or vice versa, this is a change that must be reported without delay; VAT already reimbursed in such a case is then usually repaid.
See also: Eligible expenditure, Project budget, Amendment to the Non-repayable Financial Contribution Agreement (NFP).
