Tax chargeable on any supply of goods or services is a liability of the person making the supply. Taxable person is every person, natural or legal, resident in the Republic or abroad, who carries on a business and has registered as such in the VAT Register or he is liable to be registered according to the provisions of the VAT legislation.
The term “business” has a very broad sense and means any economic activity carried out in an independent way regardless of the purpose or results of such activity. The term “business” includes any trade, profession or vocation.
Employees or other natural persons who are bound to any employer by a contract of employment or by other legal relation, which creates relationship of employer and employee, are not considered to be carrying out an economic activity and therefore they are not considered as taxable persons.
In addition the VAT legislation provides that Governmental Authorities, Local Authorities and Public Authorities are not deemed to be taxable persons for the supplies of goods or services made by them in carrying out their mission. There are, however, certain supplies explicitly defined in the legislation, for which the aforementioned persons are considered taxable persons.
The supplies of goods or services made by a person who is not considered as taxable, are not VAT chargeable. On the other hand when this person buys goods or services, he is charged with VAT as if he was the final consumer.