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  • Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 11/1/2012

Belgium: VAT essentials 

Essential information regarding VAT as it applies in Belgium.


Scope and Rates

What supplies are liable to VAT?


Value-added tax (VAT) is due on any supply of goods or services made in Belgium, where it is a taxable supply made by a taxable person in the course of a business carried on by said person.


Supply includes all forms of supply. It is not restricted to the provision of goods and services by way of sale but can equally apply to other forms of transactions, including the leasing or letting of goods, the grant, assignment, or transfer of a right, or even an agreement not to do something.


Supply does not include anything done otherwise than for a consideration. However, certain actions carried out for no consideration are deemed to be supplies; for example private use of business assets.


What is the standard rate of VAT?


The standard VAT rate is 21 percent.


Are there any reduced rates, zero rates, or exemptions?


Yes. There is a reduced rate of 12 percent for certain goods and services, including amongst others:


  • social housing (as from 1 January 2007 it is further reduced to 6 percent in certain circumstances)
  • margarine
  • meals as from 1 January 2010 (beverages: 21 percent).

In addition, there is a reduced rate of 6 percent for certain goods and services, including amongst others:


  • social housing (as from 1 January 2007 in certain circumstances)
  • food and drinks
  • books
  • drugs and medicine
  • admission to cultural, sporting and entertainment events
  • hotel and camping accommodation
  • funeral services
  • services of composers and authors (copyrights)
  • agricultural services
  • distribution of water
  • people transport.

The list of goods subject to a zero-rate includes:


  • newspapers and periodicals (published more than 48 times a year)
  • waste products (metal scrap).

The list of exemptions with right to deduct input VAT includes amongst others:


  • export of goods, intra-Community supply of goods
  • supplies with respect to aircrafts and sea-going vessels
  • supplies to embassies, consulates and international institutions.

The list of exemptions without right to deduct input VAT includes amongst others:


  • financial services
  • letting of immovable property
  • hospital services
  • medical care
  • educational services
  • cultural activities.

What are the other local indirect taxes beside VAT?


Stamp or registration duties, inheritance taxes, environmental taxes, etc. Besides that there are also various regional and local taxes, imposed by provinces and/or municipalities.

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Registration

Who is required to register for Belgian VAT?


Entities Established in Belgium


If a business makes taxable supplies or provides services within the scope of VAT in Belgium (other than VAT exempt supplies without the right to deduct input VAT) it will be required to register and in principle account for Belgian VAT. No VAT registration threshold exists in Belgium.


Small businesses with an annual turnover of less than EUR 5,580 can opt for the special system for small businesses and treat their supplies as VAT inclusive. These small businesses waive their right to deduct VAT. They may opt to charge Belgian VAT on their supplies, however it should be noted that such an option is irrevocable for two years after the year in which the option was taken.


Entities Not Established in Belgium


Entities not established in Belgium are only liable to register for VAT purposes in Belgium when they are making taxable supplies or performing taxable services in Belgium, for which they become the debtor of VAT towards the Belgian Treasury and also for some specific transactions without becoming debtor of the Belgian VAT (for example exempt intra-Community supplies).


To deal with its Belgian VAT affairs a business established in another European Union (EU) Member State may appoint a fiscal representative with joint liability towards the tax authorities, or a fiscal agent with no joint liability towards the tax authorities in case of a direct VAT registration (that is, applying for a VAT number in Belgium without the appointment of a fiscal representative). Businesses established outside the EU are always required to appoint a fiscal representative when applying for a VAT number in Belgium.


If a business is not registered for VAT in Belgium but sells and delivers goods from another EU Member State to private individuals, small businesses (that is, annual turnover of less than EUR 5,580), businesses without the right to recover Belgian VAT, agricultural businesses and public bodies in Belgium who are not VAT registered, where the value of those sales exceeds a threshold of EUR 35,000, it is required to register and account for VAT in Belgium (distance sales).


Are there penalties for not registering or late registration?


Late payment interest of 0.8 percent per month is imposed for late payment of an amount of VAT due.


A penalty of EUR 500 can also be imposed for failing to file the VAT registration application. This penalty can be reduced to EUR 250.


Is voluntary VAT registration possible for an overseas company?


If a foreign company does not become the debtor of Belgian VAT, in principle no VAT registration in Belgium will be possible. However, EU companies can opt to become VAT registered, provided that the input VAT incurred in Belgium regularly equals or exceeds the amount of EUR 10,000 on a yearly basis.


Are there any simplifications that could avoid the need for an overseas company to register for VAT?


If a business is not established in Belgium, and makes supplies of goods or performs services in Belgium to local Belgian companies filing periodical VAT returns or to businesses not established in Belgium, that are registered for VAT in Belgium through the appointment of an individual fiscal representative and file Belgian VAT returns, the obligation to account for the VAT due will be shifted to the customer and it is not required to register nor to account for Belgian VAT.


If a business is not established in Belgium and makes supplies of goods or performs services in Belgium to businesses other than local Belgian businesses filing periodical VAT returns or businesses not established in Belgium that are registered for VAT in Belgium through a fiscal representative and file Belgian VAT returns, it is required to register and account for Belgian VAT.


It is possible to avoid registering and accounting for Belgian VAT, in the above circumstances, when making certain supplies. In the following examples the obligation to account for the VAT due can be shifted to your customer provided that your customer is registered for Belgian VAT.


Triangulation


If a business is an intermediate supplier to a Belgian buyer of goods purchased from a business in another EU Member State and when the goods are directly delivered from there to Belgium, the VAT due can be accounted for by the Belgian customer (see section Invoices).


Supply and Install


If a business supplies goods and installs or assembles them in Belgium, the customer can account for any VAT due.


Reverse Charge Services


The reverse charge mechanism has had a broader scope with the introduction of new place of supply rules for services as of 1 January 2010


Bear in mind that these provisions are subject to particular requirements which should be checked carefully.


In the following situations, a business not established in Belgium cannot apply for a Belgian VAT number although it may become the debtor of Belgian VAT.


Occasional Transactions


If a business does not perform taxable transactions in Belgium on a regular basis, the Belgian VAT authorities will not grant a Belgian VAT number.


Organization of a Trade Fair/Exhibition


The Belgian VAT legislation provides a more favorable VAT regime, such as the submission of one single VAT return, if your business organizes a trade fair, exhibition, or similar event in Belgium.


Remunerated Transport of Persons


A special VAT regime which involves the filing of spontaneous VAT returns is applicable, when your activities consist of the remunerated transport of persons.


Consignment/Call-Off Stock


When a company stores stock at its customer’s premises under their control, the customer accounts for acquisition VAT on the transfer of the goods to Belgium and accounts for VAT on the subsequent supply.


Does an overseas company need to appoint a fiscal representative?


Only non-EU companies that become a debtor of Belgian VAT will have to appoint a fiscal representative. EU-companies have the choice whether they opt for a VAT registration through the appointment of a fiscal representative or a direct VAT registration.

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VAT grouping

Is VAT grouping possible?


All taxable persons established in Belgium can belong to a VAT group, provided they are closely bound to one another by financial, economic, and organizational links.


VAT grouping is not an obligation. The new system foresees a double option. Firstly, a group of taxpayers can exercise the option to create a group (first option). Secondly, an individual group member can also opt to join or not to join the group (second option). This individual option is foreseen in order to avoid that a VAT group is established with so many members that it becomes difficult to manage or control it. However, this individual option by a subsidiary not to join the group cannot be exercised (so the subsidiary must join the group) if the top-company has a direct participation of more than 50 percent unless the subsidiary can prove that it is economically, organizationally or because of other circumstances not linked with the top-company (opt-out option).


All group members are jointly and severally liable for the debts of the other VAT group members for the time of their membership and a group member must remain in the VAT group for a minimum of three years. However, if the group conditions are no longer met, a premature exit is possible or mandatory.


VAT grouping is not applicable on cross-border transactions.


Can an overseas company be included in a VAT group?


No. However, a Belgian permanent establishment of an overseas company can be included.

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Returns

How frequently are VAT returns submitted?


Most registered businesses are required to submit VAT returns on a monthly basis. However, if your annual turnover is less than EUR 1,000,000, you may opt to submit quarterly VAT returns. When filing quarterly VAT returns, your business has to make advance payments at the latest on the 20th of each second and third month of the quarter.


Businesses in the following sectors need to submit a monthly VAT return when the taxable annual turnover exceeds the threshold of EUR 200,000:


  • mineral oils
  • mobile phones, computers, peripheral equipment, and accessories
  • motorized vehicles subjected to the regulation regarding registration.

On 1 January 2010 a new threshold was added. VAT taxable persons are also obliged to file monthly VAT returns when they exceed the limit of EUR 400,000 for intra-Community supplies of goods on a yearly basis. Monthly VAT returns have to be filed following the quarter wherein the threshold of EUR 400,000 is reached.


Failure to file VAT returns on time and settle any outstanding payments may result in penalties and interest. The penalty that is imposed for late filing of VAT returns equals EUR 25 per month (if no VAT is payable for the respective declaration period) or EUR 50 per month (if VAT is payable for the respective declaration period). Non-filing of VAT returns may result in a fine of EUR 500 per VAT return.


Failure to pay in time an amount of VAT due resulting from the submitted VAT returns may be penalized with a fine of 10 percent of the VAT due and interests for late payment at 0.8 percent per month.


Are there any other returns that need to be submitted?


European Sales List (ESL)


If a business makes exempt intra-Community supplies of goods (that is, supplies of goods that are shipped from Belgium to VAT registered businesses in other EU Member States), it is required to complete ESL’s. ESL’s are completed monthly or on a calendar quarter basis depending on the amount of intra-Community transactions.


As from 1 January 2010 the intra-Community supplies of goods and services must be reported in one European Sales List. This list contains the VAT identification number of the customers established in another EU member State than Belgium and the total amount of the following transactions:


  • under code "L": the intra-Community supplies of goods
  • under code "T" : the supply of goods for which the simplification for triangular sales applies
  • under a code "S": the services to EU-VAT taxable customers for which the recipient is liable to self account for the foreign VAT (main rule B2B). The service may not be exempt from VAT in the country where the recipient is established.

VAT taxable persons filing monthly VAT returns are liable to file the European Sales List on a monthly basis. VAT taxable persons filing quarterly VAT returns are liable to file a quarterly European Sales List if the total amount of intra-Community supplies of goods per quarter does not exceed the threshold of EUR 50,000 during each of the four previous quarters.


None or late filing of the ESL’s may result in a penalty of up to EUR 2,500; inaccurate completion of ESL’s may result in a penalty of between EUR 25 and 2.500.


Intrastat Declarations


VAT registered businesses whose annual arrivals total is equal to or more than EUR 700,000 are required to declare for the arrivals. VAT registered businesses whose annual dispatches total is equal to or more than EUR 1 million are required to declare for the dispatches.


The VAT registered businesses required to declare are selected on the basis of their VAT returns for the previous year and the current year.


A VAT registered business which, for a specific year, only has one arrival of dispatch which is on its own equal to or more than EUR 700,000 or EUR 1 million respectively, should only declare this single movement. This occasional declarant does not have to submit nil declarations for the other months of the year.


The type of declarations depends (that is standard or extended declarations) on the amount of the flow of goods.


Annual Sales Listing


An annual listing must be completed each year (at the latest on 31 March) showing the supplies for an amount of more than EUR 250 exclusive of VAT to customers registered for VAT in Belgium. Failure to submit the listing may result in a penalty of up to EUR 2,500. Penalties for any mistakes in the listing are between EUR 25 and EUR 1,250.


If a business receives a purchase invoice in foreign currency, which exchange rate should be used for VAT reporting purposes? (e.g. central bank’s exchange rate applicable on the date of the invoice)


The exchange rate that has to be used is:


  • on the date of the invoice: the latest euro exchange reference rate that is published by the European Central Bank
  • in case an exchange rate is agreed between the contracting parties and provided that this exchange rate is mentioned in the contract or on the invoice: the agreed exchange rate has to be taken into consideration.

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VAT recovery

Can a business recover VAT if it is not registered?


Yes. If a business is established in another EU Member State then it should make a claim electronically via the portal-site of the Member State where it is established (based on the Directive 2008/9/EEC).


A non-EU business should recover the VAT under the 13th EU VAT Directive.


Does your country apply reciprocity rules for reclaims submitted by non-established businesses?


No.


Are there any items that businesses cannot recover VAT on?


Yes. There are certain items that businesses cannot recover VAT on.


For example:


  • Exempt supplies: where VAT relates to both taxable and exempt supplies, you need to make an apportionment.
  • Non-business (including private) activities: input VAT on non-business activities cannot be recovered.
  • Motor cars (excluding commercial vehicles): in principle the VAT is only deductible to the extent the car is used for the VAT taxable activities with a maximum of 50 percent. This applies to VAT incurred on all costs related to cars that can be used for the transport of persons, or related to cars for multiple uses (that is purchase, lease, maintenance, etc.)
  • Business entertainment/reception costs: VAT is generally not recoverable on business entertainment costs. Entertainment costs are costs incurred for the hosting, the reception, the entertainment and the recreation of persons from outside the company (public relations). Persons from outside the company are persons who do not work in the company as a board or staff member.
  • Hotel and restaurant expenditure: VAT is in principle not recoverable on hotel and restaurant expenditure except when incurred by staff personnel supplying goods or performing services outside the business premises or when incurred by a VAT taxable person who, in turn, provides hotel and restaurant services for consideration or when the hotel and restaurant costs are re-invoiced as such.
  • Purchases falling within the Tour Operators' Margin Scheme. The VAT on goods and services that fall under this scheme cannot be reclaimed.
  • Goods sold under one of the margin schemes for second hand goods. There are a number of schemes which provide for VAT to be accounted for on the goods' sales margin, but do not allow VAT recovery on the purchase of those goods.

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International Supplies of Goods and Services

How are exports of goods and services treated?


Goods


If a business sells goods to a customer who is registered for VAT in another EU Member State and the sale involves the removal of those goods from Belgium (either by the business or its customer) to that Member State, then it does not need to charge VAT and may exempt the supply as an intra-Community dispatch. It must obtain your customer's VAT number and quote it together with the reference “Exempt from Belgian VAT - article 39bis of the Belgian VAT Code” on the invoice. It should also obtain evidence of the goods' removal from Belgium.


If a business sells goods to a customer who is not registered for VAT in another EU Member State, it will have to charge Belgian VAT. If the sales exceed a certain threshold for that Member State it may have to register in the Member State under what is known as the Distance Selling Scheme.


If a business exports goods to a customer (business or private) outside of the EU, then it does not need to charge VAT. It must quote the reference Exempt from Belgian VAT - article 39, §1 of the Belgian VAT Code on the invoice, and should make sure to keep in all cases proof of dispatch/delivery of the goods to support the exemption.


Services


If a Belgian established business supplies services to a foreign business customer (B2B), in general the supply of services is taxable in the country of the recipient under the reverse charge mechanism. If however to supply of services is to a private consumer (B2C), the services are in general taxable in the country of the supplier and therefore subject to Belgian VAT.


The following exceptions apply to the B2B and B2C main rules as described above:


  • services involving real estate (taxable in the country where the real estate is located)
  • restaurant and catering services (taxable in the country where these services are physically carried out. Other rules apply if these services are performed on board a ship, aircraft, or train)
  • passenger transport (taxable in the country where the transport services are actually performed)
  • services with regard to cultural, artistic, sporting, scientific, educational, entertainment, and similar activities, along with the ancillary services (taxable in the country where those activities are physically carried out). With effect from 1 January, 2011, this exception will apply to services performed for VAT entrepreneurs only with respect to admission to the aforementioned events and the admission-related services
  • short-term hiring of transportation vehicles (for ships maximum 90 days/for other means of transport maximum 30 days); taxable in the country where the vehicle is actually put at the disposal of the customer.

Nothing changed on 1 January 2011, with regard to services performed for non-taxable persons.


The following exceptions apply to the B2C main rule:


  • intermediary services (taxable in the country where the underlying transaction is taxable)
  • intra-Community transport of goods (taxable in the country of departure). For other types of goods transportation for non-taxable customers, the place of service is the place where the transportation is actually performed
  • transportation-related services (taxable in the country where the services are physically carried out)
  • services involving movable tangible goods (taxable in the country where the activities are actually carried out)
  • services performed electronically by a VAT entrepreneur not established in the EU to non-taxable customers (taxable in the country where the customer of the service is located).

The following services performed for non-taxable customers that are established or resident outside the EU are taxable in the country where the customer is established:


  • the transfer of licenses and similar rights
  • advertising services
  • the obligation to refrain, in whole or in part, from pursuing a business activity
  • banking and insurance services
  • supply of staff
  • hiring out of movable property, with the exception of means of transport
  • operating natural gas and electricity-distribution systems
  • telecommunications services
  • radio and television broadcast services
  • and services performed electronically.

How are goods dealt with on importation?


When goods are imported into Belgium from outside the EU, import VAT, and customs duty may be due. This has to be paid or secured before the goods will be released from customs' control. Through a special license, payment of the import VAT can also be shifted to the VAT return.


How are services which are brought in from abroad treated for VAT purposes?


If a business buys in certain services from outside Belgium, it will be required to apply the reverse charge. This is intended to take away any VAT advantage of buying those services from outside Belgium.


Under the reverse charge it is required to account for VAT as output tax in the VAT return and it recovers this VAT as input tax in the same return (if it has the right to deduct VAT).


If it is able to recover all of the VAT incurred, the reverse charge has no cost effect and is a VAT compliance matter only. However, if it is partly exempt there is likely to be a VAT cost depending on the level of recovery allowed under the partial exemption method.


The application of the reverse charge is the main rule for services between two VAT-taxable persons (see exceptions in previous sections).


For services between a taxable person and a non-taxable person the reverse charge mechanism is not applicable: the services are deemed to take place where the service provider is established (see exceptions in previous sections).

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Invoices

Is a business required to issue tax invoices?


Yes, a VAT taxable person who supplies goods or who performs services other than those exempt from VAT following article 44 of the Belgian VAT Code (i.e. VAT exemptions which do not grant a right to deduct input VAT) is in principle liable to issue an invoice to its co-contractant. On the other hand in principle no invoices need to be issued in case of transactions with private individuals (some exceptions however).


What do businesses have to show on a tax invoice?


A tax invoice should contain the following data:


  • date of issue
  • the sequential number under which the invoice is reported in the sales ledger. This sequential number, according to one or more series, identifies the invoice on an unmistakable way. If the invoice adjusts an earlier invoice (such as, a credit note), unambiguous reference should be made to the original invoice. If more than one invoice is issued for the same transaction a cross-reference to the earlier invoices should be made
  • the name or company name of the supplier, the address of his/her administrative or business seat and his/her VAT identification number. As from 1 January 2008 onwards, the use of the 10-digit format became mandatory. As from that date onwards, the leading zero is to be added to the old nine-digit format
  • when the debtor of the VAT is the supplier of the goods or services, not established in Belgium, and:

    • he/she has a fiscal representative in Belgium: the identity, address of the fiscal representative, and a reference to his/her capacity
    • he/she is represented by a global fiscal representative: the identity, the address, and the VAT identification number of that representative and a reference to his/her capacity
  • the name or the company name, the address, and the VAT identification number of the customer
  • when the debtor of the VAT is the customer, not established in Belgium and:

    • he/she has a fiscal representative in Belgium: the identity and the address of the fiscal representative and a reference to his/her capacity and
    • he/she is represented by a global fiscal representative: the identity, the address and the VAT identification number of that representative and a reference to his/her capacity
  • the recipient has no Belgian VAT identification number and/or in the framework of intra-Community transactions, the foreign VAT number under which the customer is identified for VAT purposes and under which the supply of the goods or services is performed to him/her
  • in case of triangular sales, a reference to the legal provision, the number under which the VAT taxable person is identified for VAT purposes in another EU Member State and under which he/she performs the intra-Community acquisitions and the following supply of the goods, as well as the number under which the addressee of the goods is identified for VAT purposes
  • the date on which the taxable event of the supply of goods or services took place, or the date of the collection of the price (wholly or partly), as far as that date is fixed and differs from the date of issuing of the invoice
  • the quantity and description of the goods/services supplied
  • the data relating to the supplies of new means of transport. According to the VAT rate or exemption, the taxable amount, the unit price exclusive VAT and the prepayment discounts and price discounts if not included in the unit price
  • the VAT rate applicable and the total amount of VAT due expressed in the national currency of the EU Member State where the supply or the service is performed
  • when VAT is to be accounted for by the customer according to article 51, § 2, 1°, 2°, or 5° of the Belgian VAT Code, the following must be mentioned on the invoice, instead of the mentioning of the VAT rates and the total amount of VAT due: BTW “VAT to be accounted for by the recipient - article 51, § 2 of the Belgian VAT code”
  • reference to the legal provision of the EU Directive or of the national regulations according to which the transaction is exempt or according to which no VAT is to be calculated. No language requirements are in the VAT legislation. However, other laws may require use of language applicable in the district the company is located in
  • no invoices are required for exempt transactions for which no deduction of input VAT is allowed.

Can businesses issue invoices electronically?


Yes. The tax authority's permission for e-invoicing is no longer necessary. The Belgian VAT-taxable persons can choose the appropriate method of e-invoicing. However, a prior agreement between the parties is required. You will need to be able to satisfy the tax authority that there are sufficient controls in place to guarantee the authenticity of the origin and the integrity of the data flow.


Is it possible to operate self-billing?


Yes, provided the company has the agreement of its supplier/customer before doing so. There should also be an acceptance procedure put in place for each invoice.


Can a business issue VAT invoices denominated in a foreign currency?


According to the Belgian VAT legislation, invoices need to mention the total VAT amount due in the national currency of the member state where the goods are supplied or where the services are provided (i.e. in EUR if the goods or services are supplied in Belgium).

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Transfers of Business

Is there a relief from VAT for the sale of a business as a going concern?


Yes. If a company sells its business as a going concern then VAT may not be due. There are certain conditions to satisfy, for example the purchaser is a VAT taxpayer with a (partial) right to deduct input VAT whereby the assets are used to carry on a taxable activity.

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Options to Tax

Are there any options to tax transactions?


The options to tax transactions are:


  • for the transactions of small entrepreneurs for payment and collection transactions (specific conditions should be met)
  • for the sale of a new building by anyone other than the professional real estate developers.

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Head Office and Branch transactions

How are transactions between head office and branch treated?


If a head office makes a charge to its branch or vice versa this is not treated as a supply for Belgian VAT purposes. However, combined with the regulations on VAT grouping (as from 1 April 2007), it would be possible to outsource certain services to other countries and subsequently obtain them without VAT in Belgium, not just for the head office, but by the whole VAT group.


Hence, a new article 19bis of the Belgian VAT Code, which states that transactions coming from foreign entities of a Belgian company within the VAT group do not fall outside the scope of VAT.

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Bad Debt

Are businesses able to claim relief for bad debts?


Businesses are able to claim VAT back on the unpaid element through your VAT return provided that the claim is irrecoverable and definitively lost. If they subsequently receive payment for the supply then they will have to pay back the VAT element to the tax authorities in the same way.

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Anti-Avoidance

Is there a general anti-avoidance provision under VAT law?


In its battle against VAT fraud, the Belgian government has adopted legislation that includes a measure according to which the co-contract ant can be held jointly liable for the VAT due, on the condition that he/she knew or should have known that the VAT would not be paid to the Belgian treasury by the actual debtor of the VAT.


This measure is not only limited to specific goods with a high risk factor for fraud, such as computer related goods or cell phones. Instead all possible kinds of goods and even services fall within the scope of the program bill.


On the other hand, a number of conditions have to be met in order for the regulation to apply:


  • the debtor of the VAT did not pay the VAT due to the Belgian treasury with the intention to evade the VAT and
  • the co-contractant knew or should have known that the actual debtor of the VAT had fraudulent intentions not to pay the VAT that became due.

It is clear that this Belgian legislation wants to protect the interests of the Belgian treasury against VAT fraud, such as carousel fraud (missing trader). However, the range of the notion would have known as inscribed in the program bill is not defined. One can even question the conformity of this vague notion with the principles of proportionality and legal certainty. In order to protect the interests of the Belgian treasury, maybe a less far-reaching measure would have been preferable. There are also specific anti-avoidance provisions that apply. These include:


  • Goods that a business receives or produces are assumed to be sold for business purposes in Belgium, which makes Belgian VAT due.
  • Services that a business performs are assumed to be supplied for business purposes in Belgium, which makes Belgian VAT due.
  • Certain services (telecommunication services, radio and television broadcasting services, and electronically supplied services) rendered by suppliers established outside the EU Member States are taxable in Belgium when supplied to non-VAT taxable entities in Belgium.
  • Possible joint liability of directors in cases of repeated non-payment of VAT.

In July 2006 a new article 93undecies C was introduced into the Belgian VAT Code. From now on, in cases of repeated non-payment of the VAT due by a company or a large VZW/ASBL, a fault of the directors will be suspected, except when there is evidence to the contrary, which will bring into dispute their joint liability for the non-paid VAT. The suspicion does not apply when the non-payment is the result of financial difficulties which have caused the start up of a judicial settlement procedure, a procedure for bankruptcy or for judicial dissolution. Before the tax receiver can take any legal action, he/she needs to send a registered notification, after which the debtor of the VAT has one month to correct the situation, or to disprove the suspicion of fault. In the meantime, the receiver can demand conservatory measures against the directors.


In July 2006 also a general anti-avoidance measure was introduced in article 1, §10 of the Belgian VAT Code whereby the VAT authorities consider it to be abuse when transactions are essentially performed with the intention to achieve in a tax-benefit and whereby these transactions are not in line with the objective/purpose of the VAT law.

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Penalty Regime

What is the penalty and interest regime like?


The Belgian penalty and interest regime provides for both proportional and non-proportional administrative penalties.


Proportional penalties are essentially provided for the non-payment of VAT due and wrongful claiming of VAT deduction. Proportional penalties may amount to as much as 200 percent of the VAT due in the case of fraud.


Non-proportional penalties are provided for where there are errors such as non-timely payments or non-filing of the VAT returns and other VAT listings.


If a business makes an error on a VAT return, which understates its liability, a penalty up to 20 percent of the VAT not declared may apply. If you make an error on a VAT return, which overstates your entitlement to a VAT credit, a penalty of 10 percent of the VAT incorrectly claimed may apply.

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Tax authorities

Tax audits


How often do tax audits take place?


The frequency of VAT audits differs from one company to another and as such there is no binding legal or administrative guideline. Certain factors tend to trigger VAT audits however, such as:


  • cancellation of the VAT number
  • irregularities in the VAT return
  • request for VAT refunds.

Are there audits done electronically in your country (e-audit)? If so, what system is in use?


No.


Advance rulings and decisions from the tax authority


Is it possible to apply for formal or informal advance rulings from the (indirect) tax authority?


Yes, in Belgium it is possible to obtain a formal ruling from the ‘Belgian Office for Advance Rulings in Fiscal Matters’. It is also possible for a VAT taxable person to obtain a written agreement from its competent local VAT office or from the Central VAT office.


A formal ruling can only be obtained for transactions the VAT taxable person intends to perform and not for transactions which are already being carried out.


Are rulings and decisions issued by the tax authorities publicly available in your country?


Formal rulings are in principle publicly available (unless the VAT taxable person involved requested for the ruling not to be published). Agreements concluded with the local VAT offices or the Central VAT office are not published.

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Miscellaneous

In your country, are there unique specific indirect tax rules (regimes) that differ from standard indirect tax rules in other jurisdictions?


All special regimes have already been dealt with in previous sections (e.g. annual VAT return for the organization of an exhibition or trade fair in Belgium, etc.). Besides that we can also refer to the VAT exemption for lawyers, which remains applicable at this stage.


Are there indirect tax incentives available in your country (e.g. reduced rates, tax holidays)?


See previous sections: in Belgium reduced VAT rates of 6 and 12 percent apply to certain transactions.

 

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