The Belgian Parliament has adopted three pieces of legislation which set out new rules regarding VAT chargeability, groupings and the small business exemption threshold.
From 1 January 2016, Belgian companies should benefit from a rule reversal with regard to the point at which VAT is chargeable. Following the rule changes introduced in 2013, this new legislation shifts the date of VAT payment back to the date of payment of the actual invoice:
- VAT will be due at the point at which the invoice is issued, before or after moment of supply
- Where no invoice is issued before the 15th of the month following month of supply, this is the date at which VAT will become due
- The VAT will also become due when a payment is received before the supply
- VAT is chargeable on the date of payment, if a part-payment is made before supply.
A specific tax point for transactions towards public bodies is also specified in the new rules, however there are certain conditions.
Another law will come into effect 10 days after it is published in the Belgian Official Gazette. This one changes the VAT Code to comply with the European Court of Justice’s (ECJ) ruling in the Skandia America case.
The change particularly affects mixed VAT persons and may increase VAT costs and administrative burdens.
- The change sees Article 19bis abolished
Going forward, a branch or head office that is purchasing services taxable and located (or localised) in Belgium must self-account for Belgian VAT where one is a member of a VAT group either in the country or abroad.
- Whether VAT will be deductible in Belgium will be determined by deduction rights at the level of the VAT group
- The services recharged by a branch or head office to its foreign head office or branch (when a member of a VAT group), will be taken into account in deciding the deduction rights.
Finally, from 1 January 2016 the VAT exemption threshold for small business is raised from €15,000 to €25,000. Belgian-resident companies are affected (and can benefit from) the rule change, while non-resident companies selling in Belgium that are on the VAT register continue to face no threshold.
The change in the method used to determine the tax point should be welcomed by taxpayers. It clarifies that only two events are important to identify the tax point:
- issuance of an invoice (as a rule) and
- receipt of payment (even if it is only part-payment).
This should eliminate the headaches that some taxpayers have faced in respect of which period certain transactions have to be included.
The amendment in VAT group taxation was necessary to reflect the ECJ judgment in Skandia’s case, and avoid the risk of the commission launching EU law infringement proceedings.
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