Value Added Tax (VAT) is the principal type of indirect taxation in Belgium and in other European Union (EU) countries.
It is a tax on consumption applied during the production and distribution process for goods and services. It is applied on goods and certain services entering Belgium as well as supplies of goods and services located in Belgium. Although VAT is ultimately borne by the consumer as it is included in the price paid, the responsibility for charging, collecting and paying towards the tax authority lies at each stage of the process with the business supplying goods or services.
A transaction is within the scope of Belgian VAT and should be reported in the Belgian VAT return if the following conditions are cumulatively met:
Qualification as it concerns (one of the four) taxable transactions: supply of goods, supply of services, intra-Community supply or importation. A supply of goods is defined as a transfer of the (economic) power to dispose over a good pursuant to a contract for consideration. A supply of services is defined as any transaction which is not considered as a supply of goods.
An intra-Community supply is a supply of goods with transportation of these goods to another EU member state. The importation of goods means that non-EU goods are brought in ‘free circulation’ and they can then be released for use in the home market.
A business registered for the VAT will charge VAT (output VAT) on its sales (unless payment of the Belgian VAT is shifted to the customer ) and will incur VAT (input VAT) on its purchases (including any VAT paid at importation).
The difference between the output VAT and the deductible input VAT in each accounting period (month or quarter) will result in either:
There are four rates of VAT that are applied to goods and services in Belgium:
Also, a range of VAT exemptions applies, some with VAT deduction right (such as export and intra-Community supplies) and some without VAT deduction right (such as financial and insurance services, medical services, rent of real estate (with exceptions) and cultural and sport-related services). Businesses that perform VAT exempt supplies without VAT deduction right are unable to claim all of the input tax that they incur. This means that, the VAT paid to suppliers will be a ‘real’ cost.
Most goods imported into Belgium from outside the EU are subject to VAT. The import VAT will have to be paid by the importer at the time of importation. When the importation is for business purposes and the importer is registered for VAT, it may be possible to reclaim the VAT via the Belgian VAT return (subject to certain rules). Under certain conditions, an import VAT deferral license (ET 14.000 license) can be requested.
This means that the import VAT is to be declared by the importer under a ‘self- account’ scheme: the VAT payable and the deductible VAT will be reported in the same Belgian VAT return. This system avoids pre-financing of the Belgian VAT by the importer.
It is also important to note the interaction between VAT and customs. Customs duties are levied across the EU at the place where goods are imported into the community. It is levied to bring the cost of goods produced outside the EU up to the same level as those produced within the EU.
Once customs duties (and VAT) have been paid by the importer, the goods are in ‘free circulation’ and can then be released for use in the home market. Unlike other indirect taxes, such as VAT, once the custom duty has been paid, it is usually not recoverable by the importer.
Consequently, it therefore represents a bottom-line cost to the importing business, if it cannot be passed on by a price increase. VAT is charged on the value of the importation, including any customs duties.
In Belgium, there is no registration limit for VAT. However, for companies there is a special optional VAT regime, the so-called ‘small enterprises regime’. Such small enterprises whose annual turnover in Belgium is below €25,000 (excl.VAT) and annual EU turnover is below € 100.000 can benefit from a VAT exemption on the performed supply of goods and services (without VAT deduction right). Some goods and services and sectors are excluded from the special regime (e.g. immovable work sector, hospitality sector, tobacco products).
Since 2025, foreign taxable persons can also request the application of this special VAT regime when not exceeding both the national and the global threshold of € 100.000. If not requested, Belgian VAT will remain due.
A lump-sum penalty may be imposed by the tax authorities, if a taxable person fails to register at the appropriate time, as well as lump-sum penalties per VAT return, yearly sales listing and intra- Community supply listing not submitted for the related period.
For these purposes, a ‘taxable person’ includes any legal entity, also non-profit organisations, performing taxable transactions for which they are the VAT debtor.
Two or more entities can form a VAT group if:
One single VAT return should be submitted by the VAT group. An entity can only be a member of one single VAT group. The main advantage of a VAT group is that in principle any supply of goods or services by a member of the group to another member is disregarded for VAT purposes. This results in advantages: (1) VAT optimized structuring for immovable property within the group, (2) avoidance of double VAT deduction limitation, (3) optimizing VAT pre-financing and (4) avoidance of VAT risk for intra-group transactions.
There are also some disadvantages, for example all VAT group members (including former members) are jointly and severally liable for the VAT debt of the group during the period of their membership. Consequently, any decision on whether a VAT group is opportune should be taken with care.
Since 2025, foreign taxable persons can also request the application of this special VAT regime when not exceeding both the national and the global threshold of € 100.000 If not requested, Belgian VAT will remain due.
For occasional/one-off transactions a simplified procedure exists with a license for non-registration and filing of a special (one-off or a few) VAT return. In such case, no Belgian VAT number (only a so-called ‘reference number’) will be assigned and Belgian input VAT will be recoverable via the special (one-off or limited number) VAT return.
In some cases, a special registration procedure can be applied for organizers of events such as conferences in Belgium. One of the conditions to apply this special procedure is that the Belgian turnover cannot exceed €200.000 on a yearly basis. In such case, special returns will have to be filed to pay the VAT due and deduct the incoming VAT.
Registration for VAT in Belgium may also be required when a non-established EU business is involved with distance selling. Distance selling occurs when a taxable supplier in one EU country supplies and delivers goods to a non-taxable customer in another EU country. Non-taxable customers include private individuals, and businesses and other organizations not registered for VAT (either because of their size or the fact that they are exempt from having to register due to the nature of their activities).
Distance sales will be subject to VAT at the appropriate rate in the customer’ country (unless they qualify as a micro-entity with a global turnover below € 10.000).
The place of supply for electronically supplied services provided to private consumers (B2C) is the Member State where the consumer is established. This Member State determines amongst others the applicable VAT rate.
Suppliers have the choice to either register for VAT in each Member State where their customers reside, or elect to register under the VAT OSS simplification scheme in a single Member State.
A taxable person can operate OSS in Belgium in the following cases:
Foreign companies that perform taxable transactions in Belgium in principle need to obtain a Belgian VAT number. More specifically, an individual VAT number is required. In that respect, EU companies can choose between a direct VAT identification or assignment of a fiscal representative. Non-EU companies are obliged to assign a fiscal representative.
For certain limited transactions instead of requesting an individual VAT number, the Belgian VAT reporting can be done under a special global VAT registration number (BE 0796.5 or BE 0796.6) assigned to a global fiscal representative. By means of example it concerns the following transactions:
Under this system, the global VAT representative will submit a single VAT return for multiple taxable persons.
For occasional/one-off transactions, a simplified procedure exists with a license for non-registration and filing of a special (one-off or few) VAT return (see above).
In principle, a monthly VAT return has to be submitted. However, if the annual turnover realized in Belgium does not exceed €2.5 million, quarterly VAT returns can be filed (option). At the moment that the value of intra-Community supplies of goods exceeds the threshold of €50,000 per quarter, obligatory monthly ESLs and monthly VAT returns need to be submitted.
For companies trading in certain products, a monthly VAT return is obligatory if the annual turnover is more than €250,000 (i.e. energy products, mobile phones and computers and their peripherals, accessories and components, as well as land vehicles).
All VAT returns should be submitted for the monthly filing regime within 20 days after the end of the (month or for quarterly filing regime within 25 days after the end of the quarter), together with the payment of any VAT amount due. Where VAT recoverable exceeds VAT payable, a VAT refund will, in principle, be paid back by the VAT authorities when the special refund box is ticked on the VAT return.
Where VAT payable exceeds VAT recoverable, the difference should be paid by the 20th of the next month (for monthly VAT returns) or 25th of the next month after the tax period (for quarterly VAT returns).
For the late filing of a VAT return, the Belgian VAT authorities can impose strict penalties:
For late payment of the VAT amount due, the penalty is determined based on the timing of the VAT return submission:
• 5% of the VAT due if the VAT return was submitted on time.
• 10% if the VAT return was submitted late.
• 15% if the VA authorities had to issue a final replacement return.
Businesses registered for VAT purposes in Belgium and making supplies of goods or services to recipients registered for VAT in another EU country are required to submit EC Sales Lists (ESL’S). The ESLs should mention the VAT number of the recipients of the goods or services.
Above the threshold of €50,000 of intra - community supplies of goods per quarter, monthly ESLs should be submitted. Quarterly ESLs can be submitted (by option) below the € 50.000 threshold, unless the company is already filing monthly VAT returns (obligatory monthly regime for turnover threshold above €2.5 million). The monthly ESL should be submitted no later than the 20th and the quarterly ESL no later than the 25th of the month following the taxable period. If there is nothing to report, no ESL should be submitted for that month or quarter. For a VAT group, each member of the VAT group should submit its own ESL.
In addition, if the value of the intra-EU transactions of goods dispatched to or arriving from another EU country is above the annual threshold (resp. €1.000.000 and €1.500.000) a supplementary declaration (the so-called intrastate arrival and dispatch declaration) should be submitted on a monthly basis.
Finally, each year a listing of the supplies to Belgian customers registered with a VAT number in Belgium should be submitted (‘yearly sales listing’). This yearly sales listing includes the following information:
The yearly sales listing should be submitted by 31 March of the following year. If no supplies have been made during a year to Belgian customers registered with VAT in Belgium, the VAT authorities should be notified (by ticking a box on the VAT return for “nil yearly sales listing”) or a nil annual sales listing should be submitted. For a VAT group, each member of the VAT group should submit its own annual sales listing.
In case the infraction was committed with the intention to evade VAT or to facilitate VAT evasion, the 200% VAT penalty will be claimed. In other cases, reduced proportional VAT penalties apply, ranging between 5% and 100% (for some breaches, a difference is made whether it concerns the first, second or next breach). Criminal proceedings and penal sanctions may arise in the case of more serious matters (ege.g. fraud).
The Belgian VAT legislation foresees amongst others the following VAT penalties:
For a range of errors and omissions resulting in non-compliance with the VAT rules, administrative VAT penalties can be imposed. There are two types of VAT penalties: (reduced) proportional penalties and lump-sum penalties. In addition to the penalties, interest for late payment at 0.66% per month can be claimed. In case of a spontaneous VAT regularization (i.e. prior to any intervention/question of any tax authority) no proportional penalty will be due, but still a lump sum penalty could be imposed.
Additional penalties
Lump-sum penalties ranging between €25 and €5,000 are foreseen for other breaches of the VAT code. The penalty will depend on the nature and severity of the breach (e.g. €3,000 for the non-filing of the yearly sales listing and €250 per invoice with a maximum of €5,000 per breach for mistakes regarding obligatory (but not highly essential) invoice statements. For other breaches such as a failure to maintain adequate records, not providing information (including answering to questions of the VAT authorities) or (repeated) mistakes in the VAT reporting other lump sum penalties can be imposed.
Only in case a foreign company is not obliged to register for VAT purposes in Belgium, it is possible to reclaim the VAT incurred in certain circumstances and consider Belgian VAT deduction limitation rules.
Two schemes exist, one for businesses established in the EU (procedure under Directive 2008/09/EC, formerly 8th Directive procedure) and another for businesses established outside the EU (13th VAT Directive 86/560/EEC).
In both cases the claim has to be made by 30 September of the following year. . The claim period in Belgium is from 1 January to 31 December each year (or at least per quarter with exception for the remainder of the year).
The EU cross border refund scheme is available in all EU member states, and enables a business established in another EU country to recover Belgian VAT incurred. To be eligible for a VAT refund claim, the claimant has to be a taxable person established in an EU member state other than the one from which the claim is sought. In addition, the claimant:
The claim is submitted electronically in the country of establishment and will subsequently be sent over to the VAT authority from whom the repayment is being sought. The refund period could not cover more than one calendar year or less than three calendar months – unless it is covering the remainder of a calendar year. The minimum amount for a refund application is €400 (unless the application relates to a total calendar year or the remainder of a calendar year: minimum of €50).
The amount that is refundable is determined by the Belgian VAT deduction limitation rules. The general threshold for the submission of an electronic copy of an invoice is where the taxable basis on the invoice or import document is €1,000 or more (€250 for invoices relating to fuel costs). The serial number used in the application form should be mentioned on the purchase (and/or import) documents.
Businesses established outside of the EU can, subject to certain conditions, also reclaim the VAT incurred on imports into Belgium or purchases of goods and services received in Belgium. The scheme is available to any person operating a business when being established outside the EU, provided that in the period of the claim:
The minimum amount for a refund application is €400 (unless the application relates to a total calendar year or the remainder of a calendar: minimum of €50). A specific online claim form 803 should be submitted to the Belgium VAT authority no later than 30 September of the following year. For the first time a specific VAT refund identification number should be requested by e-mail.
A VAT invoice should mention:
For each different type of item listed on the invoice, the following imformation should be mentioned:
If a VAT invoice includes zero-rated or exempt goods or services, it should:
As from 2026, there is an obligation for structured electronic invoices for local transactions for a Belgian established taxable customers (filing periodical VAT returns for the Belgian VAT number). Electronic invoices shoud contain the same information as paper invoices. The method used to ensure the authenticity of origin, the integrity of content and legibility of the invoices is a business choice and can be achieved by any business controls which create a reliable audit trail between an invoice and a supply of goods or services. Special license should not be requested from the Belgium VAT authorities.
In Belgium, there are currently no SAF-T protocols foreseen and neither has there been any announcement of implementation in that respect. However, there is an announcement of e-reporting as from 2028. As from 2026 there is also the obligation for e-invoicing.
For further information on indirect tax in Belgium please contact:
|
Lode Agache |
|
