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Exempt, non-subject and exonerated: three different things that get mixed up

All three end in “no VAT is charged”, which is why they get confused. But they are declared in different boxes and they affect your input credit differently.

7 min readTicuenta
In one sentence: non-subject is what the law leaves outside the tax; exempt is what is inside but the law releases; and exonerated is what has an authorisation behind it, granted to someone specific.
 Where it comes fromWhat it means
Non-subjectArticle 9Outside the tax altogether
ExemptArticle 8Inside, but released from payment
ExoneratedAn authorisationGranted to a specific person or entity

Non-subject: outside the tax

The transaction does not even enter the scope of VAT. It is not that it is forgiven: the law says the tax does not reach there. It is in article 9, and the list is short and concrete:

  • Goods and services sold, provided or acquired by the social security fund.
  • Those of municipal corporations — including, by authoritative interpretation, cantonal sports and recreation committees.
  • Transfers of real estate and registrable movable property already taxed by the transfer tax.
  • The transfer of assets or business lines in a corporate reorganisation, when the acquirer continues the same activity.
A valuable detail in that last point. In those reorganisations, the unexpired tax credit is applied by the acquirer, either against future output tax or as a refund claim. The credit is not lost in the operation.

Exempt: inside, but released

Here the transaction is within the tax — it is a taxable sale or service — but article 8 releases it from payment. It is a long list, with very different cases in it, and it is where private education services at their various levels sit, for example.

And it is where the most-asked-about exemption lives. The lease of residential property when the monthly rent does not exceed 1.5 reference wages. And note: if it exceeds it, the tax applies to the whole amount, not to the excess.

Which is worth spelling out for anyone renting property: that exemption is for long-term housing under a threshold. It does not cover short-term tourist rental, which is taxable at 13 % regardless. The VAT on a short-term rental.

Exonerated: it has an authorisation behind it

This one is different in nature from the other two. Exempt and non-subject are properties of the transaction; exonerated is a property of the buyer. Someone holds an authorisation, granted to them, that releases their purchases.

Which is why the document has to carry the authorisation's details, and why the tax authority checks them. When you invoice exonerated, it goes looking for the number, the issue date and the percentage. If the percentage applied is higher than the one authorised, or the authorisation has expired, the document is rejected. What happens then.

The part that actually costs money: the credit

This is why the distinction is not academic. As a general rule, if a transaction generates no tax, the purchases related to it generate no credit — so the seller eats their suppliers' VAT as one more cost.

The important exception is export, which is exempt and keeps the credit. If you sell abroad, that is money you can recover and that goes unclaimed all the time. How it works.

Different boxes on the return

The three are reported separately, which is the practical reason to get them right: a sale recorded as exempt when it was non-subject, or as non-subject when it was exonerated, produces a return that does not reconcile with the documents behind it. And the documents are what the tax authority has.

From Ticuenta

Each one in its own box

The treatment comes with the product and the customer, and the monthly figures come out split the way the return expects them.

See how it works

About this article. Non-subject transactions are article 9 of the VAT Act; exemptions, its article 8, including the residential lease threshold of 1.5 reference wages; the right to credit on exports, its article 30. Exonerations rest on the specific authorisation granted, not on the law alone.

Verified as of 24 September 2026. Tax rules change. This is information, not tax advice.

Sources: Current legal texts (Sinalevi) Ministry of Finance

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