Further to the number of different VAT changes that have taken place in Belgium, we thought it important to provide you a short recap of all recent VAT developments that have come into force as from 2014 and which could have some impact on your business.
If you have questions with regard to the changes mentioned below, please do not hesitate to get in touch with your regular PwC contact or one of the people mentioned on this website.
Change of VAT rate for supplies of electricity from 21% to 6%
The federal government has announced that the VAT rate applicable to electricity will decrease from 21% to 6% as from 1 April 2014 until 31 December 2015, with an option to extend the application of the lower VAT rate after evaluation of its effects.
Rental of permanently-installed equipment and machines subject to VAT
As from 1 January 2014, the letting of permanently-installed equipment will be regarded as taxable in Belgium. In this respect, article, 44 §3, 2 a) of the Belgian VAT Code has been changed.
This change in legislation could have the direct effect that positive VAT revision(s) on investment goods can be requested and that a 100% VAT deduction can be obtained for this type of ongoing and new lease/rental contracts. As from 1 January 2014, VAT applies to fees invoiced in the framework of such contracts.
Retention record to be supplied
As from 1 January 2014, a “retention record” with special probative value will have to be supplied by the VAT authorities when taking with them any books and/or invoices or copies of said documents during an audit. The retention record should be sent by the VAT authorities to a VAT taxable person within five working days, thus replacing the old acknowledgement of receipt.
Intra-Community acquisitions outside scope of VAT
The intra-Community acquisitions of goods relating to vessels for navigation on the high seas, diplomatic and consular arrangements, international bodies etc. that were – up to 1 January 2014 – exempt from VAT under article 42, §1, §2 and §3, first subparagraph, 1° to 8° of the Belgian VAT Code, fall – as from 1 January 2014 – outside the scope of VAT through inclusion of such transactions in article 25ter, §1, second indent, 1° of the Belgian VAT code.
This purely technical adaptation of the Belgian VAT Code has as a consequence that these transactions will no longer have to be included in the Belgian VAT return of the recipient of the goods.
Increased capital assets threshold for VAT
Pursuant to a Ministerial Decree of 4 December 2013 (Belgian Official Journal of 9 December 2013), the capital assets threshold for VAT is increased from EUR 250 to EUR 1,000, with effect from 1 January 2014.
This means that small office equipment with a value of less than EUR 1,000 will no longer be regarded as capital assets for VAT and thus no longer subject to input VAT revisions and reporting in the VAT assets table for the investments made as from 1 January 2014.
VAT threshold for small and medium-sized enterprises increased from EUR 5,580 to EUR 15,000
The Council of Ministers approved the increase of the VAT threshold for small and medium-sized companies from EUR 5,580 to EUR 15,000. The new threshold of EUR 15,000 will become effective on 1 April 2014.
This measure will prevent small associations and start-up companies from having to comply immediately with all VAT obligations as long as their turnover does not exceed the above threshold. This regime is optional and cannot be imposed.
This increased threshold may be of importance for various kinds of associations, start-up companies but also for example for the pharmaceutical sector dealing with doctors performing different types of services that might not benefit from the VAT exemption for medical care.
Transitional regime for “advance invoicing” extended till 31 December 2014
In the administrative decision ET.124.705 of 22 November 2013, the transitional system whereby one can opt to continue applying the former “tax point” rules has been extended by an additional year (i.e. to 31 December 2014).
However, companies can already apply the new tax point rules, having the effect that no VAT will become due as from the issuing of the advance document under certain conditions.
As a result of these new tax point rules, two documents have to be issued: one document to claim the advance payment and one invoice when the payment has been received. In order to avoid the need for issuing two documents, the new administrative decision provides an additional administrative tolerance stating that it is allowed to immediately issue a real advance invoice (and no advance document) in line with the invoicing requirements if that invoice clearly contains the following statement: “Application of the new legal tax point rules – The right to deduct VAT arises only as from the time of payment of the advance invoice”.
This tolerance has the effect that the VAT due stated on the advance invoice only becomes due and needs to be paid to the VAT authorities as from receipt of the payment and only provides a right to deduct VAT as from the time that payment has been made.
Lawyers subject to Belgian VAT
As from 1 January 2014, services performed by lawyers are no longer VAT exempt but subject to Belgian VAT. The new VAT status of lawyers in Belgium is extensively documented in a VAT Circular issued on 20 November 2013.
The new status allows lawyers to apply positive VAT revisions on capital goods, but such VAT reclaims should be offset against the VAT payable for the year 2014, any remaining balance can be reclaimed at the end of the year 2014.
Threshold for filing “quarterly VAT returns” increased to EUR 2,500,000
The threshold to be able to file quarterly VAT returns has been increased to EUR 2,500,000 per calendar year, reducing the compliance obligation for small and medium-sized companies in Belgium.
For companies supplying energy products, mobile communication appliances, computers and cars the special threshold of EUR 200,00 for filing quarterly VAT returns has also been increased to EUR 250,000.
Please note however, that if the threshold for filing monthly “European sales listings” has been exceeded, one would always be obliged to file monthly VAT returns, whether or not the threshold of EUR 2,500,000 or EUR 250,000 has been exceeded.
Simplified self-billing obligations – Circular Letter no. E.T. 123.724 of 16 December 2013
In the above mentioned Circular Letter , new guidance on the conditions and implementing terms for applying a self-billing procedure has been provided, as regulated under Article 53, §2 of the Belgian VAT Code and amended following the 2013 VAT Invoicing Changes (Invoicing Directive 2010/45/EU, as implemented by the Belgian Act of 17 December 2012).
The new Circular Letter takes effect on 1 January 2013 (meaning retroactively) and replaces Circular Letter no. 48/2005 dated 8 December 2005.
Generally speaking, there are no significant changes to the self-billing rules.
The basic conditions to implement a self-billing arrangement remain unchanged but are now form-free, allowing an implicit acceptance of the self-bill and a verbal prior agreement between the parties.
It is, however, recommended that the prior agreement is made in writing. This prior agreement does not need to be notified to the VAT authorities but proof can be requested during a VAT or tax audit. An explicit acceptance of the self-bill remains in place where parties have set these conditions in the prior agreement.
The New Circular Letter provides a new invoice reference where the reverse charge mechanism is applied. In the case of application of self-billing with a reverse charge, the following specific reference to the new Circular Letter is required: “Btw verlegd – Circulaire AAFisc nr. 53/2014” / “Autoliquidation – Circulaire AGFisc n° 53/2013”, and the existing authorisation or notification obligations towards the Belgian VAT authorities remain unchanged.
Amended procedure for applying VAT exemption for continuous supplies of water, gas, electricity and telecommunication services to diplomats and international organisations
The Belgian VAT administration published a new Circular Letter on the application of the VAT exemption for continuous supplies of water, gas, electricity, telecommunication services and cable distribution to diplomats and international organisations for “official use” (Circular Letter no. E.T. 111.330/2 dated 29 January 2014).
The Circular Letter takes effect on 1 January 2014 and amends the procedure for applying this VAT exemption.
According to the new Circular Letter, it is no longer required that the beneficiary organisation proves the application of the VAT exemption of the services received based on an annual certificate for validation by the Belgian VAT authorities. The issuance of a single certificate to the authorities at the beginning of the supply of the continuous services is sufficient.
Despite this simplification, the requirement for the organisation to inform the authorities and your business of any change impacting the application of the VAT exemption is maintained. Moreover, this simplification does not release your business from the requirement to provide the authorities on an annual basis with a list of continuous supplies for which the VAT exemption has been applied.
This changed procedure could be of importance for telecom, cable distribution, water, electricity and gas companies doing business in Belgium.
New rules applicable to certified cash register systems in the catering, hotel and restaurant sector
The Belgian VAT administration published an Administrative Decision that clarifies the obligations for taxable persons active in the catering sector to use an approved electronic cash register (Administrative Decision E.T. 123.798 of 24 January 2014).
As from 1 January 2015, the approved electronic cash register will become obligatory. In the meantime, taxable persons can voluntarily opt to apply the approved electronic cash register in return for beneficial social security measures.