Transitional regime extended for the year 2014 & Opening of infrindgement procedure against Italy

Patrick Boone 16 December 2013


Belgian VAT Tax point rules: extension of the transitional regime by one year

Based on the implementation of the Invoicing Directive 2010/45/EU in Belgium, the issuance of an invoice prior to a taxable event is no longer considered as a tax point for Belgian VAT purposes as of 1st January 2013. As a result thereof, a recipient has no longer the right to deduct input VAT upon receipt of an advance invoice. Input VAT deduction only arises when a taxable event takes place (generally speaking, when the supply is complete or upon payment prior to the completion of the underlying supply).

A transitional regime for one year was put in place for the year 2013, during which both the suppliers and the customers could still use the “old” rules.

As a result of continuing administrative difficulties to which businesses are confronted further to this change in tax point, the Minister of Finance has now decided to extend the transitional regime by one additional calendar year as from 1st January 2014. The practical conditions of this extension will be published shortly.

A new consultation round will be organised with all the parties involved, with the purpose of bringing these new tax point rules into force as of 2015.

Should you have any questions or require assistance, please contact your regular PwC VAT consultant or one of us.

Italian Refund Procedure: Opening of infringement procedure against Italy

Following the Italian refund procedure, each taxable person, not established in Italy, asking for a VAT refund through its Italian VAT return must submit a (bank or insurance) guarantee covering the full amount of the VAT credit refund request.
This (bank or insurance) guarantee must be submitted for each VAT refund request and must be maintained for a period of three years, even when the VAT refund has been made.

If a taxable person is established in Italy and meets certain requirements, it may be exempt from the requirement to submit a guarantee.

In this respect, PwC Belgium received a formal notice that the European Commission has decided toformally launch an infringement procedure against Italy as they consider Italy to be in breach with the principles of neutrality and proportionality for the following reasons:

  • Too stringent and automatic conditions are imposed to taxable persons in order to be relieved from the obligation to provide a guarantee in order to benefit from the shortened VAT refund period;
  • Taxable persons are too exposed to financial risks in their attempt to recover input VAT, due to an excessively long period of time for the annual VAT refund;
  • The delay of the refunds for excessively long periods of time, even where it is established that the refunds are due and indisputable.
    As the letter of formal notice is not the final step in the official complaint procedure and the political decision still needs to be taken, we recommend clients facing VAT refund delays in Italy, to continue to file complaints with the European Commission evidencing the above described Italian refund practice.

Should you have any questions or require assistance, please contact Sibylle Vandenberghe (+32 9 268 82 3) or one of us.

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