This means that, a VAT taxpayer who receives an advanced invoice with VAT will be unable to deduct the VAT amount as long as the supply of the goods or the completion of the service has not taken place or as long as the payment is not done.
One might wonder whether a supplier needs to report the VAT amount immediately in its VAT return when issuing an advanced invoice. After all, the issuing of an advanced invoice no longer makes VAT due. One might even question whether it is even allowed at all to issue an invoice before the time of supply or before the payment has been done?
Due to this lack of clarity, many companies were unable to adapt their invoicing processing systems timely in accordance with the aforementioned new rules. Therefore, the Belgian VAT authorities published amongst other the following point of view:
: for supplies for which Belgian VAT is charged on the invoice, you can choose whether you already apply the new rules during 2013 or not.
: services which are deemed to take place in Belgium following the general business-to-business rule (i.e. place of supply of a service is where the recipient of the service is established) and for which the Belgian established customer needs to account for the Belgian VAT due following the reverse charge mechanism (reporting the Belgian VAT, once as due and in principle as deductible at the same time), no transitional regime is applicable. These services include amongst others transport services, handling services, administrative services, services of intermediary persons.
By means of example, the following practical problems for these services may occur:
- To the extent an invoice is received (for incoming services) upfront, the recipient may not apply the so-called reverse charge mechanism as no taxable event has taken place yet. This mechanism may only be applied at the moment the taxable event took place. Even more due to the fact that at the moment of receipt of the advance invoice, the taxable event could not be mentioned on the invoice (although this should) as this has not been taken place yet, this invoice is not in line with the Belgian VAT law. This means that to the extent the VAT taxpayer would decide to apply the reverse-charge mechanism at the moment of receipt of the upfront invoice, he in principle cannot deduct this VAT.
- To the extent an invoice is issued (for provided services) upfront, this invoice will not be in line with the Belgian VAT law as the taxable event has not taken place yet and could therefore not be mentioned on the invoice, although this should.
The administration already confirmed that an advanced invoice will be accepted to the extent it has been issued a couple of days before the taxable event takes place. Please note that a clarification of what is meant by “a couple of days” has not been published yet.
Taken the above into account, also for these transactions, it will most likely be impossible to report them at the right moment in the correct VAT return with the correct relating invoice.
Consequently, one might wonder to what extent it would also not have been advisable to also have a transitional regime for the intracommunity services and even more, what the consequences can be at the occasion of a VAT inspection.
In principle the administration will publish additional comments relating to the new invoicing rules applicable as from 2013. Hopefully these comments will further clarify some pending practical issues.
We keep you posted and to be continued. For more information please contact An De Roest.