Update on recent VAT developments in Belgium

Patrick Boone 19 December 2013


vat-iconeAt the end of each calendar year, a number of important decisions that could have an influence on the VAT situation of your business are usually taken by government officials.
Therefore please find below a recap of the most relevant decisions that have already been taken or have been launched for approval in Parliament.

Change of VAT rate for supplies of electricity from 21% to 6%

In the framework of the measures taken to increase the competitiveness of our companies, the Federal Government has decided to decrease the VAT rate for the supply of electricity from 21% to 6%.

Negotiations are ongoing with Regional Governments at this stage to support the financial impact of this decision. The exact scope and timing of this new measure still need to be determined.

Transitional regime for ‘advance invoicing’ extended till 31 December 2014

In administrative decision ET. 124.705 of 22 November 2013, the transitional system allowing one to opt to continue applying the former ‘tax point’ rules has been extended with an additional year (till 31/12/2014). This decision allows advance invoices still to be issued following the old rules, making the VAT due and recoverable as from the issuing of an advance invoice.
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 (based on the previous decision) provided that:

  • the document issued does not qualify as an invoice and does not state any VAT amount, any VAT rate or any reference why no VAT has been reported;
  • the invoice is issued on the 15th day of the month following the receipt of the advance payment or the taxable event of the total supply.

If a company using the new tax point rules would, however, issue an advance document including a VAT reference or a VAT amount, application of the old tax point rules is obligatory, having the effect that VAT on the advance document will become due at that stage.
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 payment has been received.

In order to prevent the need for issuing two documents, the above new administrative decision introduces an additional administrative tolerance stating that one is allowed to issue immediately a real advance invoice (and no advance document) in line with the invoicing requirements if that invoice clearly reports 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.

VAT threshold for small and medium-sized enterprises increased from EUR 5,580 to EUR 15,000

Further to a press release of the Belgian Finance Minister, it has been decided to increase the old threshold, for small and medium-sized enterprises as laid down in article 56, §2 of the Belgian VAT Code, from EUR 5,580 to EUR 15,000. 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. Please note, however, that this regime is optional and can be applied for but not be imposed. The exact date the new threshold is to become effective has not yet been determined at this time.

Rental of permanently-installed equipment and machines subject to VAT

Following the Bill of 6 December 2013 introduced in Parliament, permanently-installed equipment and machines will become subject to VAT as from 1/1/2014. By doing so, Belgium implements article 135, section 1 (c) of Directive 2006/112/EC, providing that article 44, §3, 2 a) of the Belgian VAT Code will include an additional point, excluding the letting of permanently-installed equipment from the VAT exemption for letting of immovable property.
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 leases/rental contracts. As from 1/1/2014, VAT applies to fees invoiced in the framework of such contracts.

New official working method for keeping documents by VAT authorities during audits

In the past, the Belgian VAT authorities were allowed to keep documents under article 61, §2 of the Belgian VAT Code by issuing an acknowledgement of receipt. As this practice raised many discussions around the procedure to be followed, the Bill of 6 December 2013 introduces a so-called ‘Retention record’ with special probative value, stating that a retention record is correct until evidence to the contrary can be produced. This so-called ‘Retention record’ should be sent by the VAT authorities to a VAT taxable person within 5 working days. According to the Bill of 6 December 2013, this new procedure is to become effective on 1/1/2014.

Should you have any further questions in this respect, please contact your regular PwC adviser or one of us.

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