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New requirements apply to the direct attribution method for VAT deduction from 2023
29 November 2022
On 10 November 2022, the Royal Decree of 26 October 2022 (Dutch I French) was published in Belgium’s official journal, providing detailed new rules on the direct attribution method for VAT deduction (“werkelijk gebruik”/“affectation réelle”), that can be applied by certain partially exempt (“mixed”) VAT taxpayers. Key changes include a new procedure, applicable as from 1 January 2023, for affected taxpayers to notify the Belgian VAT authorities of their decision to use the direct attribution method, and an obligation to provide key information on a yearly basis relating to the VAT deduction. While the objective of the new measures is to reduce the administrative burden by using digital communication channels, the higher level of transparency available to the tax authorities means that affected taxpayers will need to take into account the additional obligations and potential increased scrutiny of their use of partial exemption arrangements.
Federal Budget 2023 | Overview of most relevant tax measures
14 October 2022
On 11 October 2022, the Belgian government reached an agreement on the Belgian federal budget for 2023 and 2024. A non-exhaustive overview of the most important tax and social security measures is provided below. Please note that many aspects and details of the relevant measures are still unclear to date.
Draft bill containing changes to the VAT procedural rules introduced in the Chamber of Representatives
10 October 2022
On 3 October 2022, a draft bill containing various tax and financial provisions was introduced in the Chamber of Representatives. This draft bill contains some remarkable proposals to change the VAT procedural rules.
Reduction of VAT penalties by the court: no prior application for annulment required
7 October 2022
In its judgment of 23 September 2022, the Belgian Court of Cassation ruled that, even if a taxpayer did not apply for an annulment according to Article 9 of the Regent’s Decree Nr. 78 of 18 March 1831, the Court can still check the legality of the imposed sanction with “full jurisdiction” and reduce or waive the penalty.
VAT credit on the VAT current account does not expire
13 July 2022
In its judgement of 17 June 2022, the Belgian Court of Cassation ruled that VAT credit on a VAT current account does not expire. With this judgement, the Court of Cassation confirms an earlier judgement of the Court of Appeal of Liège. The Belgian VAT authorities’ viewpoint was rejected, again.
Hardcopy VAT quarterly account statements to be withdrawn for most taxpayers
24 June 2022
The Belgian VAT authorities have announced that they will no longer provide hardcopies of quarterly VAT account statements to most taxpayers as from the third quarter of 2022; instead, the quarterly statements will be made available online via MyMinfin. More information on how taxpayers can view the statements and determine the current status of their VAT account can be found on the tax authorities’ website (Dutch I French).
CJEU ruling enhances legal certainty for taxpayers on VAT fixed establishment concept
11 April 2022
The Court of Justice of the European Union (CJEU) on 7 April 2022 released its judgement in the Berlin Chemie case (C-333/20) on the concept of a fixed establishment for VAT purposes. The case had been referred to the CJEU by the Curtea de Apel Bucureşti (Court of Appeal, Bucharest). The CJEU ruled that a subsidiary providing exclusive marketing and publicity services to a group company acting as central entrepreneur does not create a fixed establishment for VAT purposes of the central entrepreneur in the subsidiary’s country of residence. In its considerations, the CJEU explicitly acknowledges that the same resources cannot be used simultaneously by the subsidiary to provide services and by the foreign group company to receive those services. The ruling provides clear guidance for tax authorities around Europe to define their position on the VAT fixed establishment concept, which hopefully will restore legal certainty for taxpayers.
New EU rules on reduced VAT rates lead to changes in Belgium
7 April 2022
On 5 April 2022, the European Council formally adopted Council Directive (EU) 2022/542 introducing reforms to VAT rates. Under the new rules, that were agreed in December 2021 and endorsed without changes by the European Parliament, EU member states are able to apply reduced VAT rates and even a super-reduced or zero VAT rate to an updated and extended list of supplies (see Deloitte Belgium’s VAT alert dated 9 December 2021). The new directive amends Directive 2006/112/EC on the common system of VAT (the European VAT directive) and Council Directive (EU) 2020/285 concerning the special scheme for small enterprises and applies as from 6 April 2022, its date of publication in the Official Journal of the European Union.
Guidance issued on VAT treatment of charging stations and charging of electric vehicles
6 January 2022
On 20 December 2021, the Belgian VAT authorities published new administrative guidelines (Circular 2021/C/113, Dutch I French) on the VAT aspects related to the installation of charging stations for electric vehicles and supplies of goods and services related to these charging stations.
Long awaited reform of EU VAT rates agreed by European Council
9 December 2021
On 7 December 2021, the Council of the European Union agreed the text of a proposed directive on reforms to EU VAT rates that have long been debated. Under the new rules, member states would be able to apply reduced VAT rates and even a super-reduced or zero VAT rate from a renewed and extended list that would replace both the existing list (dating back to a directive from 1992) and derogations granted to individual member states. The proposals must be endorsed by the European Parliament before the Council can formally adopt the directive.
Belgian Minister of Finance confirms intention to implement mandatory B2B e-invoicing
15 November 2021
In accordance with the announcements in the 2022 budget agreement, Belgium’s Minister of Finance Vincent Van Peteghem released a policy note on 29 October 2021 reaffirming the intended implementation of an e-invoicing mandate for business-to-business (B2B) transactions in the near future.
VAT fiscal representative: new calculation method for the financial guarantee towards tax authorities
26 August 2021
New rules will apply for calculation of the financial guarantee when a fiscal representative is appointed as from 1 October 2021. The financial guarantee, which must always be provided, will be set at 10% of the annual VAT balance due, with a minimum of EUR 7,500 and a maximum amount of EUR 1,000,000. Royal Decree 31 has been amended to reflect the new rules (Dutch | French).
Demolition and reconstruction: VAT-authorities publish updated FAQ
14 June 2021
The generalised application of a reduced VAT rate of 6% for the demolition and reconstruction of dwellings has entered into force since 1 January 2021. The main novelty is that the scheme allows, until 31 December 2022, the sale of reconstructed dwellings throughout Belgium with a 6% VAT rate. The VAT-authorities now published an updated version of its 'FAQ' on 3 June 2021 (see also our earlier VAT Alert). This update contains a number of new views and clarifications (Dutch | French).
Supreme Court confirms limitation of VAT deduction on publicity and estate agency fees on split sales of land and buildings
11 June 2021
In a judgment dated 21 May 2021, the Supreme Court decided that, in the context of the Vos Aannemingen case, the VAT authorities had rightly limited the deduction of VAT on publicity and estate agency costs paid by the construction company in a split sale structure (land sold by the landowner and buildings sold by the construction company/building company).
However, the Court did not rule on the extent to which the deduction of VAT on such costs should then be limited.
No fixed establishment for VAT when a foreign based company rents out immovable property without own staff
8 June 2021
On 3 June 2021, the Court of Justice of the European Union (CJEU) issued its ruling in the Titanium Ltd case (C-931/19), regarding the question whether renting out real estate can qualify as a fixed establishment for VAT. In a bold and clear judgment, the Court confirms that there is no fixed establishment if no own personnel is in place.
CJEU confirms VAT applies on intra-entity supplies across EU member states where VAT group exists
12 March 2021
On 11 March 2021, the Court of Justice of the European Union (CJEU) issued a ruling in a case (C-812/19) concerning supplies of services from a head office of a company that was part of a VAT group in one EU member state to its branch in another member state. The court confirmed that its previous jurisprudence in the Skandia case, concerning a branch that joined a VAT group and received services from its overseas head office, has a broad application and that the principles established applied also to the current case. Following the ruling, all situations where one or more establishments enter a VAT group will lead to VAT on recharges for services between the establishments. The case has particular relevance for financial services and insurance businesses that often operate through branch structures and, in certain countries, are obliged to enter into a VAT grouping with affiliated companies.
Guidance issued on extended scope of VAT rate reduction for demolition and reconstruction
26 February 2021
As from 1 January 2021 through 31 December 2022, the scope of the reduced VAT rate of 6% for the demolition of property and subsequent reconstruction of residential property in Belgium is temporarily extended.
VAT registration: no obligation for UK companies to appoint fiscal representative in Belgium
14 January 2021
The UK-EU future economic partnership agreement reached on 24 December 2020 includes a protocol on administrative cooperation and combating fraud in the field of VAT, as well as mutual assistance for the recovery of claims relating to taxes and duties.
While such protocol mainly concerns the relationships between tax authorities in the UK and those in EU Member States, one practical effect it has for businesses established in the UK is that they should, in principle, be able to register for VAT in EU Member States without the obligation to appoint a fiscal representative.
UK-EU Trade and Cooperation Agreement: tariffs and origin implications
11 January 2021
On 24 December 2020, the UK and EU negotiators signed the Trade and Cooperation Agreement (TCA), defining the trading relationship between the two blocs as of 1 January 2021. What follows is a closer look at the implications regarding import tariffs.
Brexit impact on e-commerce transactions: are you ready for new UK VAT rules?
17 December 2020
With the end of the Brexit transition period fast approaching, Belgian and EU businesses supplying goods within or to Great Britain (GB) should prepare for the newly proposed UK VAT rules as of 1 January 2021.
The VAT treatment of supplies of goods from the EU to Northern Ireland will, in principle, not change as of 1 January 2021. As far as supplies of goods are concerned, the Northern Ireland jurisdiction will remain subject to the intra-EU VAT rules, including the e-commerce changes on 1 July 2021.
VAT e-commerce package: European Commission publishes explanatory notes
27 October 2020
On 30 September 2020, the European Commission published its explanatory notes on the new VAT e-commerce rules, which will come into effect on 1 July 2021. The legislation that puts these new rules into place consists of changes to the EU VAT Directive and Implementing Regulations that govern more practical aspects, such as the reporting formats for the different One Stop Shop schemes (‘Modernising VAT for cross-border e-commerce’). In parallel, changes were made to customs legislation to better accommodate import flows in the future regime.
The explanatory notes contain extensive clarifications on these new rules, FAQs, as well as some specific scenarios on how to apply VAT e-commerce rules for suppliers and electronic interfaces involved in e-commerce transactions (e.g. marketplace, platform). In the near future, these explanatory notes will be further complemented by an update of the Guide to the One Stop Shop and specific guidance in the customs field.
EU VAT e-commerce package postponed until 1 July 2021
24 July 2020
Following the proposal of the European Commission on 8 May 2020 (see our alert of 12 May 2020), the Council of the European Union on 22 July 2020 formally agreed to delay the entry into force of the VAT e-commerce package by six months. The new rules, under which all B2C sales of goods to EU consumers will be taxed in the destination Member State, now will apply as from 1 July 2021 instead of 1 January 2021. This gives Member States and businesses more time to prepare for the necessary changes.
European Commission announces measures for fair and simple taxation supporting Europe’s recovery strategy
22 July 2020
On 15 July 2020, the European Commission adopted a Tax Package consisting of three initiatives: a detailed Action Plan with 25 distinct actions to make taxation simpler, fairer and better attuned to the modern economy over the coming years, a proposal for changes to the Directive on administrative cooperation in the field of taxation, and a Communication on good tax governance. The majority of the proposed changes will impact VAT legislation and the obligations of businesses in the field of VAT.
CJEU advocates broad application of VAT on early termination fees
9 July 2020
On 11 June 2020, the CJEU confirmed that amounts received by an economic operator after an early termination of a service contract that requires a customer to comply with a tie-in period, are considered as remuneration for a supply of services, and therefore subject to VAT. This is also the case where the early termination charge is less than the amount that the provider would have received if services would have continued for the remainder of the contract.
CJEU confirms broad interpretation of “transport by or on behalf of the supplier” for distance sales rules
25 June 2020
On 18 June 2020, the Court of Justice of the European Union (CJEU) ruled that, in applying the distance sales rules, even a supplier’s mere recommendation of a transporter on its website can constitute “transport by or on behalf of the supplier”. Consequently, the supplier has to pay VAT in the non-taxable customer’s country, rather than in their own.
VAT filing extensions and exemption from late payment interest
22 June 2020
The Belgian VAT authorities will grant VAT taxpayers automatic filing extensions for the periodical VAT returns and European Sales Listings relating to the months of June and July, or the second quarter of 2020. In addition and under certain conditions, taxpayers can obtain an exemption from late payment interest should they make a delayed payment of VAT return balances for these periods (Dutch | French).
VAT e-commerce Package: European Commission proposes delayed entry into force
12 May 2020
As part of a broader postponement of EU taxation measures following COVID-19 related difficulties currently faced by businesses and Member States, the European Commission has proposed to delay the entry into force of the VAT e-commerce package by six months. The new rules, under which all B2C sales of goods to EU consumers will be taxed in the destination Member State, will apply as of 1 July 2021 instead of 1 January 2021. This will allow Member States and businesses more time to prepare for the necessary changes.
VAT on service supply: subsidiary not a fixed establishment of foreign based parent by default
11 May 2020
In a recent case, the Court of Justice of the European Union confirmed that a subsidiary does not automatically qualify as a fixed establishment of a foreign based parent. A service provider should determine the recipient of its service based on commercial and economic reality, without being obliged to investigate whether the relationship between the parent and its subsidiary may qualify as a fixed establishment (Dutch | French).
New guidance on intra-Community VAT regime and Quick Fixes
7 April 2020
On 3 April 2020, the Belgian VAT authorities published a new circular letter that provides a comprehensive overview of the practical application of the VAT rules for intra-Community supplies of goods (Dutch | French). It is a comprehensive, 270 page overview of administrative positions developed since 1993 in this field, including a detailed overview of the EU VAT Quick Fixes, which came into force on 1 January 2020 (VAT alert of 30 September 2019).
New circular letter regarding the VAT treatment of tour operators and travel agents
7 April 2020
On 24 March 2020, the Belgian VAT authorities published a new circular letter regarding the VAT treatment of tour operators and travel agents (Dutch | French). This circular letter replaces the old guidance on this subject.
The main changes brought by the new guidance relate to the invoicing process of tour operators and travel agents.
The new practical rules will in principle need to be implemented by the travel sector for new bookings as of 1 April 2021.
COVID-19: General VAT credit refund possibility
30 March 2020
On 29 March 2020, the Belgian tax administration published an additional measure to support the liquidity of businesses following the COVID-19 outbreak. The new measure consists of a generalised possibility for VAT registered businesses that submit monthly VAT returns to request a refund of their credit VAT balance through the February 2020 VAT return.
The tax authorities published an update announcing the above measure, adding that the return would need to be submitted by 3 April 2020 at the latest.
COVID-19: No VAT due on donated medical equipment and protective gear
17 March 2020
On 24 March 2020, the Belgian VAT authorities published new guidance clarifying that no VAT is due, as a self-supply, on medical equipment and protective gear donated to hospitals by VAT registered businesses.
In principle, when supplying goods for free, VAT taxpayers who deduct VAT on purchases or production costs of said goods should make a correction and pay output VAT in the form of a so-called self-supply. This obligation is now temporarily waived for supplies made between 1 March and 30 June 2020, under specific conditions explained in a new circular letter (Dutch | French).
New statistical reporting obligations for large VAT Groups
22 January 2020
From 2020, additional statistical reporting obligations apply to members of a large VAT Group, i.e. one with an annual turnover of at least EUR 15 Million reported in VAT returns. A breakdown of information contained in the VAT Group’s VAT return will have to be reported at legal entity (i.e. member) level to the National Bank of Belgium (NBB) to allow more accurate statistical accounts (Royal Decree of 11 December 2019). The first declaration through Onegate, the NBB’s electronic portal, is due by 20 April 2020 for first quarter figures.
New monthly VAT refunds for “starters” and a stricter filing deadline for monthly VAT refund requests
16 December 2019
On 11 December 2019, the Belgian VAT Authorities published a Circular Letter (Dutch | French) providing guidelines on the possibility for taxpayers at the start of their economic activity (so-called “starters”) to request a refund of their outstanding VAT credit on a monthly basis, taking into account certain conditions and formalities; this during a period of two years. The new monthly VAT refund regime will enter into force as of 1 January 2020.
Non-EU companies can no longer act as exporter from the Netherlands as of 1 April 2020
20 November 2019
Dutch Customs will soon implement the requirement for companies to be established in the EU, for the latter to be able to operate as exporter for customs purposes; this in accordance with the updated definition of ‘exporter’ in the Union Customs Code Delegated Act (“UCC DA”).
Last year’s update of the UCC DA, and of Article 1(19) in particular, consequently prohibits the reporting of a non-EU established company as ‘exporter’ of goods in Box 2 of the customs export declaration.
Subsidiaries only deemed VAT Fixed Establishment of foreign based entities if there are abusive practices - CJEU Advocate General
15 November 2019
A preliminary question referred by the Polish courts to the Court of Justice of the European Union (CJEU) underlines an important issue on the concept of VAT fixed establishments for internationally active businesses (pending case ‘Dong Yang’, C‑547/18). Advocate General Kokott delivered her Opinion in this case and took a clear stance against certain tax authorities’ approach in considering a dependent but legally autonomous subsidiary as a fixed establishment of its foreign parent company. She invited the Court to provide a clear answer to this question.
Brexit deal | Indirect tax implications
18 October 2019
The UK Government and the EU have released a new draft Protocol on Ireland/Northern Ireland and Political Declaration, which, amongst other things, sets out the UK Government’s policy on the Customs Duty and VAT implications for Northern Ireland of a Brexit deal with the EU.
It should be noted that this Protocol, along with the rest of the draft Withdrawal Agreement, is subject to approval at a special session of UK Parliament sitting this Saturday 19 October 2019. At present, it is by no means certain that the Withdrawal Agreement will be approved.
Once the Withdrawal Agreement is approved by the UK Parliament, it will also need to be approved by the EU Parliament. Further to the approved Agreement, there will be a transitional period where the current rules apply until at least 31 December 2020, with an option to extend until 31 December 2021 or 2022.
Post-Brexit, Customs and regulatory checks and tariffs, where applicable, will apply on goods moving between the UK and the EU. From a VAT perspective, supplies of goods between the UK and the EU will be treated as exports and imports. This note deals with special exceptions to the above, which have been proposed in relation to Customs Duty and VAT provisions applying to Northern Ireland.
Explanatory notes on EU VAT Quick Fixes published
30 September 2019
On 26 September 2019, the European Commission published a draft version of the Explanatory Notes in relation to the so-called ‘quick fixes’.
As from 1 January 2020, several ‘quick fixes’ will impact the current VAT system for B2B intra-community supplies.