The primary objective of this research was to assess the effects of statutory changes for institutions and companies expressly stated in Article 11 Paragraph 1 of the VAT Act. According to Article 11 of the Value Added Tax Act currently in force, banks, building societies, savings and loan organisations, insurance and reinsurance companies, private medical practices, healthcare and education establishments and other establishments listed in the same Article are exempted from the obligation to charge VAT on any deliveries of goods or services they make (the institutional approach). These legal entities, according to the current provisions of the Law, do not have the right to deduct prepayment of tax. Harmonisation of regulations with the acquis will bring a change in the sense that institutions and companies as defined in Article 11 of the current law will be included in the VAT system according to what is called the functional principle. This means that these legal entities will still be exempted from the obligation to charge VAT without the right to deduct prepayment of tax, but only for certain kinds of services and delivery of goods defined in the Sixth EU Directive. Also, according to the same Directive, they will have the obligation to pay VAT for other deliveries of goods and services but will partially be able to claim a refund of tax prepayment. Put in more simple terms, according to the Sixth Directive, some services and deliveries of goods will be exempt from charging VAT (the functional approach), regardless of which institution or company is performing them.
An estimate was made regarding the amount of VAT that these legal entities will have to pay according to EU rules (VAT liable for payment), i.e., the amount of budgetary revenue from VAT from such institutions and companies.