VAT is an indirect tax, i.e. it is included in the selling price in order, as they say, to be further “passed off to the customer”. Which means VAT cannot be treated as an expense in the cases other than some break-even point calculations. In fact, people sell at the price that a customer can afford and it’s dependent on market conditions. When it comes to VAT deductions, often either they are not applicable or direct material costs are too low. In accounting, the profit is calculated based on the revenue, excl. VAT, and the prime cost figures. Whatever method you use to calculate your break-even point, you are welcome to share your experience as to whether break-even point sales are possible in VAT countries. Anyone is welcome to comment.