Perspectives

COVID-19 Indirect Tax

Indirect tax (VAT, customs and excise) reliefs and concerns

COVID-19 is heavily disrupting social and economic life. In order to provide support to companies during these unprecedented times, Deloitte Belgium is launching a series of free Q&As relating to some of the indirect tax (and customs regulatory) consequences of the outbreak.

Indirect tax filing and payment reliefs

Q&A  #1

Are there any filing extensions granted for VAT or Intrastat returns?

An automatic filing extension is granted for the periodical VAT returns, European Sales Listings and Annual Sales Listing. There is no need to request for these extensions.

Periodical VAT returns

Submission deadlines (extended)

Monthly return February 2020

Until 6 April 2020

Monthly return March 2020

Until 7 May 2020

Monthly return April 2020

Until 5 June 2020

Quarterly return Q1 2020

Until 7 May 2020

If a taxpayer qualifies as a ‘starter’ or has a monthly refund license, the maximum extension to maintain the benefit from a monthly refund is until the 24th of the month following the return period.

 

 

European Sales Listing (ESL)

 

ESL February 2020

Until 6 April 2020

ESL March 2020

Until 7 May 2020

ESL April 2020

Until  5 June 2020

ESL Q1 2020

Until 7 May 2020

 

 

Annual Sales Listing (ASL)

 

ASL 2019

Until 30 April 2020

If the activity of the company has been terminated, the ASL must be submitted no later than the end of the fourth month after the end of the activities

For Intrastat returns, no filing extensions have been granted. Companies facing difficulties to meet the due dates, are recommended to inform the Intrastat authorities (companies’ NBB contact) accordingly and upfront.

 

Q&A #2

Can I delay the payment of the VAT amounts due by the company?

An automatic extension of two months is granted for the VAT payments resulting from the February, March and Q1 VAT returns.

VAT payments related to

Payment deadlines (extended)

Monthly return February 2020

Until 20 May 2020

Monthly return March 2020

Until 20 June 2020

Monthly return April 2020

Until 20 July 2020

Quarterly return Q1 2020

Until 20 June 2020

For the payment of VAT that has become due for VAT returns of the January 2020 or earlier taxable periods, taxpayers can request deferral of payment. they are not granted automatically (see below).

What if the above payment extension(s) would not suffice?

All natural or legal persons in possession of an enterprise number and able to demonstrate that they are negatively affected by the COVID-19 outbreak can request payment deferral. Affected persons can request aid in the form of a payment plan, exemption from late payment interest and a remission of fines for non-payment.

Taxpayers planning to apply for aid are requested to submit a form (one per debt) that should be sent by mail or letter to the competent regional centre (Regionaal Invorderingscentrum / Centre régional de Recouvrement).

Requests need to be filed by 30 June 2020 at the latest.

 

Q&A #3

Can I request an accelerated refund of my VAT credit?”

An accelerated VAT refund for the February and March returns can be requested by a VAT registered business filing monthly returns.

How

  • The VAT return related to February 2020 should be filed by 3 April 2020 at the latest. If your VAT return is already filed, and the refund request box was not ticked, then a corrective VAT return (with said box ticked) should be filed by 3 April 2020 the latest. In this VAT return, the box labelled “Aanvraag tot terugbetaling” / “Demande de restitution” should be ticked.
  • The VAT return related to March 2020 should be filed by 3 May 2020 at the latest.

Conditions

To qualify for the refund, the following conditions should be met:

  • The VAT credit position should amount to at least EUR 245;
  • All VAT returns for the current calendar year must be submitted;
  • The VAT authorities must have the bank account details of the business requesting the refund. Businesses that did not communicate their bank account details at the start of their activity must do so through the submission of form 604B (Heading IV), signed by a person authorised to legally bind the company.

 

Q&A #4

Next to announced VAT payment reliefs, have the authorities also taken payment relief measures in other indirect tax areas?

Yes. As of 21 March 2020 and at least until 30 June 2020, the excise duty, packaging tax and VAT payment terms for alcohol and (alcohol containing) beverages are extended from one to four weeks for all companies holding a credit account.

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Indirect tax aspects of cancellations

Q&A #1

What happens if my company needs to cancel an event? Do I need to reimburse any VAT?

If you have charged your customers (before the event) for the entry ticket or participation fee, VAT was due on this turnover upon receipt of the payment (B2C transactions) or upon the issuance of the invoice (B2B transactions). This VAT had to be paid through your VAT return for that period. Upon cancellation, the VAT initially paid to the Treasury can be recovered through your VAT return, to the extent that this VAT is also being reimbursed to the client.

What happens if my company cancels the event without reimbursing the entrance fee?

In such a case, the entry or participation fee is considered to cover the costs of the initially foreseen service (i.e. event). Even though the service is not delivered after all, as the organiser has been paid, it would normally be impossible to recover the VAT from the Treasury.

Would the answer be different if my company makes a partial refund to the customer?

If only part of the entrance fee (along with the related VAT) is refunded to the customers and the contract allows the organiser to keep the remainder as an indemnity based on force majeure, it could be argued that this latter amount is no longer the price for attending the event, as there is no link between a service and the retained amount. In such a case, the retained amount could be considered as outside the scope of VAT, and the organiser may have the right to reclaim the VAT initially collected over the full participation fee.

What would happen if the event is postponed, but not cancelled?

In such case and in principle, no repayment to the customers will be made, and therefore no refund of VAT can be claimed. However, if the organiser would consider offering alternatives, opportunities for VAT recovery could arise, but this will depend on the actual circumstances.

Can my company still deduct input VAT on costs relating to the cancelled event? 

Yes, taking into account the normal deduction limitations.

 

Q&A #2

Can my company suspend indirect taxes and import duties for goods on their way to Europe, but for which the order was cancelled?

Yes this is possible. Already under the current rules and procedures, importers can opt to keep their goods in temporary storage (for max 90 days), or to have their goods temporarily stored in a customs bonded warehouse (for an unlimited period). In Belgium, both regimes fully suspend customs import duties, import VAT and excise duties, where applicable. Such suspension would become permanent if it would eventually be decided to re-export the goods out of the EU.

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Horeca (hotel, restaurants and catering services)

Q&A #1

What is the VAT impact if I start providing take-away food and/or offer a delivery service to my customers?

Whilst restaurant services are subject to the VAT rates of 12% (food) and 21% (drinks), both take-away and delivery of food and beverages are considered to be supplies of goods subject to the reduced VAT rate of 6%. Note that beers (>0,5% alcohol) and other alcoholic drinks (>1,2% alcohol) are always subject to the standard VAT rate of 21%.

If you charge an additional fee for delivery, this fee will in principle follow the same VAT treatment as the delivered goods. However, if one product in an order is subject to 6%, the whole delivery fee can be charged at the VAT rate of 6%.

Note that, if you are using a registered cash system (GKS), you remain in principle obliged to issue a receipt from the registered cash system to your customer for these supplies.

 

Q&A #2

Are there any VAT consequences if I provide meals for free to people working in the health care industry?

The provision of meals, for free, to people working in the health care industry is normally considered as a taxable supply for VAT purposes if you deducted the VAT on the costs to prepare these meals. Consequently, under a strict reading of the current legislation 6% VAT (applicable VAT rate for the supply of take-away meals) is in principle due on the cost of the meals via a self-supply. In order to report a self-supply and pay the VAT due, an internal document must be drafted on which the cost price and VAT due is mentioned. This internal document must be reported in the periodical VAT return as a regular sales invoice. The Belgian tax authorities have made an exception to this rule for the supply of goods to victims of disasters. The extraordinary nature of the COVID-19 outbreak could justify the application of this exception.

 

Q&A#3

What is the VAT rate for restaurant- and catering services?

As from 8 June 2020 until 31 December 2020, a reduced VAT rate of 6% applies to all restaurant- and catering services. The reduced rate applies even if only beverages are sold. The standard VAT rate of 21% remains applicable on the supply (even in the context of restaurant- and catering services) of beer with an alcohol percentage of more than 0.5% and other alcoholic beverages with an alcohol percentage of more than 1.2%.

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Indirect tax aspects of donations

Q&A #1

What are the VAT consequences when my company donates goods in response to the COVID-19 outbreak? 

For VAT purposes, donating goods is regarded as a supply of goods for free. When supplying goods for free, VAT taxpayers deducting VAT on purchases or production costs of said goods should make a correction and pay the output VAT in the form of a so-called self-supply (‘onttrekking’ / ‘prélèvement’). This output VAT is a cost for the VAT taxpayer making the donation.

Are there any exceptions? 

For the donation of medical equipment and protective gear (‘medische hulpmiddelen’ / ‘dispositifs medicaux’), the obligation to perform a self-supply, and thus pay VAT on the donated goods, has been temporarily waived for donations made between 1 March and 30 June 2020. 

The administration issued a circular letter (Dutch | French) in which the conditions are further explained. These conditions can be summarised as follows:

  • Goods in scope: The exception applies to (i) Protective gear (mouth/face masks, protective clothing, anti-bacterial products, etc.), and (ii) all medical equipment defined under the RD of 18 March 1999, regardless of the applicable VAT rate. Medicines are explicitly excluded from the scope of the circular letter.
  • Beneficiaries: The exception applies to supplies made directly to healthcare institutions, such as those within scope of the VAT exemption of article 44, §2, 1°, a) in the VAT Code (i.e. hospitals, associations or groups of hospitals,). In addition, it was confirmed that residential care centres (institutions providing care for the elderly), childcare centres, institutions providing care for the disabled, schools, universities and humanitarian aid organisations are also covered.
  • Donors: Any taxpayer can qualify, including taxpayers who intentionally bought the goods to donate them as a reaction to the COVID-19 outbreak.
  • Required formalities: A specific document should be drafted, where the healthcare institution confirms that the goods were obtained free of charge and where it mandates itself to either use the goods or make them available to other healthcare institutions, free of charge. In principle, such document should be drafted for each donation, although a single document that covers a group of donations or all donations made during a month is acceptable.

Note that these rules apply in addition to the following existing and specific regimes:

  • The exception to report a self-supply for the donation of vital non-food items to charity, as introduced by the Law of 7 April 2019; and 
  • The exception to report a self-supply for the donation of vital food items to foodbanks or charitable organisations.

Questions regarding donations?

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Alternative delivery models

Stay tuned for upcoming Q&As on this topic

Questions regarding alternative delivery models?

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Regulatory measures

Q&A #1

Can exporters continue with business as usual?

For many exporters this is not the case. On 15 March 2020, as part of the response to the COVID-19 outbreak's consequences, the European Commission published Implementing Regulation (EU) 2020/402, making the exportation of certain personal protective equipment (PPE) subject to the production of an export authorisation (except when exported to Norway, Iceland, Liechtenstein, Switzerland, Andorra, Faeröer, San Marino, Vatican City and the OCT. Both the Belgian customs authorities and the EU Commission issued further guidance regarding the practical implementation of the aforementioned Regulation. Customs is actively monitoring export of products potentially in scope, and can confiscate shipments that do not comply. As such, it is recommended to have items potentially falling within range of the measure attested before their export.

Where can I go with my questions on COVID-19 and its impact on Customs & Trade?

At Deloitte, our Global Trade Advisory experts are readily available to answer your questions. In addition, on 23 March 2020, Belgian customs authorities launched a single point of contact through which traders can submit COVID-19 related trade questions: da.crise-crisis@minfin.fed.be.

Are any specific indirect tax measures taken at national level to address the imminent need for protective equipment and other products such as disinfectants?

Yes. Very specifically authorised warehousekeepers are temporarily permitted to produce denatured ethyl alcohol for further production of disinfectants for the medical sector, without this specific operation being foreseen in their authorisation; however, with the obligation to fulfill all other formalities, including the filing of excise declarations. Furthermore, the use of an extended range of specific denaturing agents for aforementioned purposes is permitted, and corresponding excise declarations will need to be filed. Finally, under certain conditions, pharmacists are allowed to denature ethyl alcohol and produce disinfectants themselves with full relief of excise duties, without possessing otherwise required authorisations.

 

Q&A #2

Do I still need to physically present hard copies of certificates and authorisations upon verification by the customs authorities?

Yes and no. As of 24 March 2020 and until further notice, instead of originals, electronic copies of authorisations and certificates can be presented to customs via e-mail, regardless of whether these were originally issued electronically or not. Originals do however need to be kept available by the applicant. This new way of working is valid on both inbound and outbound sides. However, as an important exception to this general tolerance, authorisations and certificates that need to accompany the goods (T2L, ATR, EUR1,…) still need to be physically presented at the competent customs office on the outbound side.

 

Q&A #3

Have customs measures been taken to tackle potential shortage of bonded storage space for goods entering from outside the EU?

Yes. Given the considerable pressure that COVID-19 puts on the bonded storage capacity in Belgium, the Belgian customs administration decided to allow all holders of an authorisation for temporary storage, bonded warehousing, inward processing relief and approved locations to extend the applicability of their authorisation to additional locations within Belgian territory, by a simple e-mail application with the office that can issue such authorisation.

Has the Belgian government taken measures to facilitate the importation of personal protective and other COVID-19 related materials into the EU?

Yes. Under certain conditions, importers of such goods can apply for a waiver of import duties that are normally due. Next to customs duty relief, qualifying flows can also benefit from a relief of import VAT. Furthermore, for certain gear that is subject to an attestation of conformity with EU standards, certificates from certain non-EU test bodies will be exceptionally accepted, as well as products that comply with non-EU but internationally recognised standards.

The customs authorities have published a non-exhaustive list of acknowledged organisations and products (Dutch | French) for which import duties and VAT can be waived. These lists are used as a guideline in line with the adopted Decision of the European Commission on the relief of import duties and VAT exemption on imported goods needed for the combat against the effects of the COVID-19 outbreak. The guidance (Dutch | French) confirms and expands on the conditions and procedures to make use of the foreseen exemption.

 

Q&A #4

Are there any simplifications in the documentary requirements for exporters?

Yes. The use of alternative certification methods, such as self-issued origin declarations on the invoice or other qualifying trade documents, is strongly recommended at EU level.

In view of this ask, Belgian customs authorities have decided to facilitate operators who are not yet an "authorised exporter - origin" but would like to obtain such status. Specifically, they will temporarily allow operators to be granted a (provisional) approved exporter license if certain conditions are met, postponing the required compliance audit to a later stage.

Have there been any excise relief measures regarding the use of denaturants for the production of disinfectants?

Certain companies are allowed to produce excise duty exempt hydro alcoholic gels without using any actual denaturant. For non-jellified hand alcohol, the requirement to add one of the approved denaturants remains required in order to benefit from excise exemption on these products. Furthermore, ad-hoc deviations can be made from the aforementioned conditions, if the products are supplied to operators active in the healthcare sector.

 

Q&A #5

With phytosanitary controls on plants, animals, food or feed, can I provide my official certificates or declarations electronically to the customs authorities?

Temporarily, Member States can allow economic operators to provide official certificates and declarations electronically to the customs authorities. However, the person responsible for the submission of the official documents will have to provide the original certificate or declaration as soon as it is technically feasible. The Belgian Federal Agency for the Safety of the Food Chain has implemented this measure.

Will there be fewer controls on goods due to the COVID-19 outbreak? 

Not necessarily, the national authorities performing controls on plants, animals, food or feed can designate third parties to perform the official controls. The authorities are also allowed to designate third party laboratories to perform tests and analyses on products. Physical controls can be replaced and performed with the available means of distance communication. The Belgian Federal Agency for the Safety of the Food Chain has not set such additional measures in place, however, working with third party laboratories to perform the testing of samples is already standard procedure.

 

Q&A #6

Can I track the clearance status of my inbound shipment of non-EU mouth masks?

Yes, The Belgian customs authorities have created a central point of contact for this purpose, through which importers of mouth masks entering the EU via Bierset or Zaventem can track the status of their shipment via e-mail.

More information on the procedure can be found on the authorities' website (Dutch | French).

 

Q&A #7

What is the applicable VAT rate when selling/purchasing protective equipment?

While the default VAT rate is 21%, between 4 May and 31 December 2020, a reduced rate of 6% applies on the supply, intra-Community acquisition and import of certain face masks and hydro alcoholic gels.

Masks in scope

  • Mouth masks and protective equipment with the following GN/NC codes: 4818 90 10 00, 4818 90 90 00, 6307 90 98 10, 6307 90 98 91, 6307 90 98 99 and 9020 000 80.
  • This includes masks that are made of paper, paper pulp, cellulose wadding or cellulose fibers, for household, hygienic or clinical use; as well as masks of other fabrics, regardless of whether they are produced from bound textile fleece.
  • Both reusable masks and disposable masks are envisaged. This particularly concerns surgical (medical) mouth and nose masks, FFP type masks (Filtering Facepiece Particles) and generally masks that, while not necessarily compliant with European regulations and standards, are made of the aforementioned materials and cover mouth and nose.
  • The reduced rate can also be applied to filters produced for the abovementioned masks.
  • The reduced rate does not apply to protective visors, scarves and bandanas.

Hydro-alcoholic gels

  • This includes alcohol gels for human hygiene.
  • In this context, the VAT administration also allows hand alcohol without the gel component (e.g. liquid offered in an atomiser bottle).
  • The percentage of ethanol is not relevant.

Questions regarding regulatory measures?

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