Belgian Tax reform – VAT

Latest update: 3 February 2025

On 31 January 2025, a new Belgian Federal government agreement was announced, bringing with it expected significant changes in tax policy during the next government period. 

Regarding the indirect taxes, the most important announced measures would be the following:

• For demolition-reconstruction projects, the supply at 6% VAT by real estate developers would be reinstated
• Clarification of the definition of renovation and reconstruction works for VAT purposes
• VAT on heat pumps would be reduced to 6% (instead of 21%) during next 5 years, but the Installation of fossil fuel boilers and the VAT of coal would increase increases to 21% 
• Introduction of the “near real-time reporting”
• Excise duties on tobacco will increase further and new variants and alternatives in addition to traditional tobacco products will be taken into account  
• Excise duties on zero-drinks, tea and coffee would be abolished
• Reduction of the packaging tax for water, reusable packaging and all products that are significantly more expensive than in neighboring countries.
• Airplane tax: €5 on all flights, and Belgium will advocate for a kerosene tax

These measures are of course subject to change. They are not yet included in a draft law and, afterwards, still have to be enshrined in a law after having followed the legislative process.

For more details, don’t hesitate to contact your PwC contact.

Update:  31 January 2025

Below we briefly highlight some important changes to the Belgian VAT rules, with a focus on the transition to electronic invoicing and the modernization of the so-called VAT chain in Belgium. In addition, we briefly discuss the possible impact of the current version of Super Notea by Bart De Wever as published in the summer of 2024 on the Belgian VAT landscape.

From a customs perspective, 2024 was again a year with numerous changes, mainly driven by the evolving Global Trade environment and the need to adapt customs procedures to this, the push of the European Green Agenda and the geopolitical situation. The most important updates are explained below.

1. Mandatory electronic invoicing for B2B transactions

The law of 6 February 2024 makes electronic invoicing between Belgian VAT payers (“B2B”) mandatory from 1 January 2026 onwards.

From 1 January 2026, Belgian VAT payers must issue a structured electronic invoice in the Peppol BIS format (‘Pan-European Public Procurement On-Line’) for certain supplies and deliver it to their customers via the Peppol network. This can only be deviated from if both parties agree and the invoices issued comply with the European standard for structured electronic invoices.

To determine whether a structured electronic invoice must be issued, three criteria must be taken into account: (i) the capacity of the issuer, (ii) the capacity of the recipient and (iii) the nature of the transaction.

The introduction of mandatory electronic invoicing will have a major impact on the administrative processes and IT systems of the VAT payers involved. They will have to prepare for this change in time and undertake the necessary adjustments. Furthermore, the Belgian VAT administration will have better audit capabilities through structured electronic invoices, and compliance will therefore be more crucial than ever.

We would also like to emphasize that the Belgian authorities in the short term intend to transition from the currently implemented 4-corner model to a 5-corner model. This would enable the Belgian VAT administration to continuously monitor the process, introducing real-time electronic reporting in addition to electronic invoicing.

2. Modernization of the VAT chain

As of 1 January 2025, the law of 12 March 2023 with the so-called modernization of the VAT chain will gradually enter into force. The aim of the law is to offer more flexibility, clarity and simplification to all stakeholders throughout the VAT chain. A circular is also expected in January 2025 to explain the new regulations in practice.

Submission deadlines for quarterly VAT returns

The most important change concerns the filing deadlines for quarterly VAT returns, which must now be filed no later than the 25th day of the month following the calendar quarter in question. This also applies to the payment of VAT due and the filing of the statement of intra-Community transactions for quarterly filers. Monthly filers must continue to file their Belgian returns and statements and pay the VAT due on the 20th of the following month.

Improved periodic declarations

From 1 January 2025, corrective periodic declarations can no longer be submitted after the statutory submission deadline has expired. From then on, any change must be made via correction in the next declaration. In addition, VAT payers must also respond to a request for information about VAT within one month. In the event of urgency (e.g. if the rights of the Treasury are at risk), this is even within 10 days.

The ‘replacement VAT return’

A major innovation is the automated procedure for a ‘replacement VAT return’ if a VAT payer fails to file its periodic VAT return (on time). The VAT authorities will then send a proposal for a replacement return three months after the return period, using the highest VAT amount of the past twelve months as the amount due, with a minimum of EUR 2,100. VAT payers will have one month to file the missing return, which will cancel the proposed replacement. If no action is taken, the replacement return will become final (although businesses can still file an objection).

Refund of VAT credits from periodic returns

The reform also addresses the procedure for the reimbursement of VAT credits from periodic returns, effective as on 1 February 2025. Under the new rules, refund requests will only apply to the surplus established during the filing period, with a minimum refund amount of EUR 50. Any positive balance that is not requested for refund will be transferred to the new VAT provision account. These amounts can then be reclaimed via a separate procedure. The conditions for refunds have become stricter. Since a credit can be reclaimed via each monthly return, the existing procedure under the monthly refund permit will be abolished.

VAT provision account

The introduction of the VAT provision account marks a shift from the prior “current account” system. In addition to the amounts paid in anticipation of a periodic return to be paid, this account lists credits from periodic VAT returns that have not been requested for reimbursement or do not meet the reimbursement conditions. The credits can be used to offset future tax liabilities, or used by the administration to settle other tax debts. It is therefore advisable to keep the provision account under control. The provision account will be implemented in May 2025, and new bank account numbers for VAT payments will be introduced from the same date, with automatic redirection of payments to old accounts. From 2026, companies will be able to opt for direct debit via MyMinfin.

Penalties for unsubmitted and late payments

From 1 January 2025, new proportional and non-proportional fines will be imposed for late or non-submitted returns and late payments of VAT due. If a VAT payer files his return on time but pays too late, a fine of 5% of the tax due will apply. If the return is late or a replacement return is issued, the fine increases to 10%, and if no return is filed after a replacement proposal, the fine increases to 15%. The non-proportional fines will also increase in the event of recurring infringements.

4. EU trade policy and strategic use of customs tariffs

Trade policy includes both defensive and trade promotion measures through which the EU aims to achieve fair and equitable trade.

Pan-European-Mediterranean (‘PEM’) Agreement

The PEM Convention aims to establish uniform rules of origin and cumulation between the members of the PEM Convention (25 jurisdictions around Europe) for imports at reduced import duties. On 1 January 2025, the revised PEM Convention rules entered into force. The main advantages of the revised rules are:

• the permitted tolerance for non-originating raw materials is increased from 10% to 15%;
• the EUR-MED certificate of preferential origin is abolished, from now on only a EUR.1 certificate will be used;
• the ‘direct transport’ rule has been replaced by the ‘non-manipulation’ rule;
• more flexible and simplified product rules (i.e. the conditions that a product must meet to be considered originating);
• The ban on duty drawback has been lifted, meaning that customs regimes can now be used to avoid import duties on raw materials and at the same time obtain preferential origin status for the finished product. In the past, companies had to choose between one of the two.

Please note that not all jurisdictions have yet transposed these rules into national legislation, which means that the old rules might still apply in some cases. As of 1 January 2026, only the revised rules of origin will apply to all contracting parties.

New agreements 

A Free Trade Agreement that has been the subject of lengthy negotiations in the past is the EU-Mercosur trade agreement. The EU is the most important trading partner and investor in the Mercosur countries.

In early December 2024, the EU and Mercosur countries reached a political agreement, concluding negotiations. This is the first step towards finalizing the Trade Agreement and will be translated into law and ratified in the coming years.

During 2024, rounds of negotiations were completed to conclude Free Trade Agreements with Indonesia, the Philippines and Thailand. Negotiations are expected to resume during 2025.

EU Trade Defence policy

2024 has been recorded as a year in which an increasing number of requests for the imposition of anti-dumping duties, countervailing duties and countermeasures were filed with the European Commission, with this trend expected to continue in 2025. We refer to the example of the definitive countervailing duties for a period of 5 years on electric vehicles produced in China. Additional duties of up to 35.3% apply to electric vehicles produced in China.

The election of Donald Trump could potentially (once again) have a major impact on European businesses in the coming year. The “America First” and “Buy American” policies during his first term led to a trade war between the major trading blocs, resulting in a tangle of global tariff measures and consequences for international supply chains.

5. Digitalization of trade

One of the biggest changes in the Belgian customs landscape over the past year was the implementation of a first part of the new declaration systems under the European Multi-Annual Strategic Plan for electronic Customs (‘MASP-C’).

The most visible change was the export module for drawing up export declarations (‘PLDA’) which was replaced by the new declaration module ‘AES’.

Proof of Union Status (‘PoUS’), which replaced T2L and T2LF to prove the Union status of goods with an electronic exchange of messages between authorised senders and consignees, was launched earlier this year.

At the end of November 2024, phase 5 of the New Computerised Transit System (‘NCTS’) was made available in the test environment in Belgium, with 21 January 2025 as the final deadline. Given that NCTS is the European system for the transit of goods under suspension of customs duties and VAT across the territory of the EU, the proper functioning of this system is indispensable for a logistics hub such as Belgium.

During 2025, the modules of the old PLDA and related systems will be migrated on a systematic basis, with the most important step being the implementation of the import declaration system IDMS by the current deadline of 5 February.

However, these adjustments do not always run smoothly, which is why it is advisable for companies to continue to communicate proactively with their customs representatives and logistics partners in order to reduce blocked shipments and additional costs to an absolute minimum.

6. EU sanctions against Russia

The European Union began imposing a series of sanctions against Russia in 2014 in response to the annexation of Crimea. Additional restrictive measures were introduced in 2022 following Russia’s invasion of Ukraine. A 13th, 14th and 15th sanctions package against Russia were introduced throughout 2024. The EU also decided to impose a new sanctions package on Belarus. Although more limited, the sanctions are in line with those targeting Russia.

In addition to expanding the list of products subject to restrictions (drone parts, LNG, transformers) and expanding the number of sanctioned persons, vessels (the so-called “shadow fleet”) and entities, there are some important adjustments.

For example, European parent companies are required to ensure that their subsidiaries in third countries do not engage in activities that circumvent sanctions. In addition, they now have the opportunity to claim compensation for damage caused by Russian companies as a result of the implementation of sanctions and expropriation. This has been supplemented by a ban on the recognition or enforcement in the EU of judgments of Russian courts.