The publication on its website of the 2025 VAT calendar shows that the VAT administration is keeping his word. The explanatory memorandum to the VAT Chain Modernisation Act had already announced that as a result of the extension of the filing deadline for quarterly VAT returns to the 25th of the month following the quarter, the existing tolerances on filing and payment deadlines would be abolished.

This is not just about the tolerance that no penalty is imposed in case of a late VAT return filed before the 10th of the month following the month in which it was due. The new VAT calendar now shows that both the extension to the next working day if the deadline for submission and payment is a Saturday, a Sunday or a legal holiday, and the summer tolerance are also abolished.

The tax authorities do provide for a transition period until May 1, 2025. Until then, the extension of the filing deadline to the next working day will still apply. So for the VAT return for the fourth quarter 2024, VAT payers have until 27 January 2025 to file it and pay any amount due. Monthly taxpayers have until 22 April 2025 to file and pay their VAT return for the month of March 2025.

To get refund of any VAT credit arising from the VAT return, that return must be filed by the statutory deadline. No tolerances will be allowed on this from 1 January 2025. So the VAT return for the fourth quarter 2024 must then be filed by 25 January 2025, and that for March 2025 by 20 April 2025.

Finally, don’t forget that from 1 January 2025, the penalties for late filing and payment, among others, will also be adjusted. You have been warned.

Happy X-mas holidays!

A ruling by the European Court of Justice could drastically change the Belgian VAT revision rules for renovations. Possibly, the 15-year revision period could apply. This could obviously play to the advantage of the VAT payer if he can deduct additional VAT on renovations.

The Drebers case

Following the abolition on 1 January 2014 of the general VAT exemption for lawyers’ services, as a result of which these VAT payers were in principle entitled to deduction from that date, a law firm reviewed the VAT due on renovation works to the office building that was originally not deducted. In doing so, the VAT taxpayer took into account the review period for real estate assets, regularising 1/15 of the non-deducted VAT in its favour for 2014 and each subsequent year of that 15-year review period.

Since the renovation did not give rise to the creation of a ‘new’ building, the tax authorities argued that the five-year revision period applied, so the VAT taxpayer regularised a 90,000 euro VAT overpayment in her favour.

During the trial, the Ghent Court of Appeal was alerted by the VAT payer to a possible conflict of the Belgian regulation with the European VAT Directive. And that was apparently enough for the court to put two preliminary questions to the European Court of Justice. These boil down to whether the 15-year review period should also not apply to immovable works that result in a building that is not a ‘new’ building but have a similar economic lifespan as a ‘new’ building and, if so, whether the VAT payer can invoke that 15-year period before the courts on the basis of the direct effect of the VAT Directive.

The European Court’s ruling

The ECJ finds that Belgium has used the option provided by Article 190 of the VAT Directive to nevertheless consider services as capital goods if they have characteristics similar to those normally attributed to capital goods. Since ‘immovable capital goods’ are a special type of ‘capital goods’, that provision also applies to immovable capital goods, even if it is not expressly provided for in the legislative text.

Based on the file, the Court finds that the works carried out:

• have lasted for several years;
• led to a major renovation of the building in question;
• have also extended the building by adding a glass annexe and a lift shaft;
• have a cost of €1,937,104.

According to the court, the result of these works therefore appears to have the same economic lifespan as a new building, and the works themselves clearly resemble immovable capital goods rather than other capital goods.

In such a case, if the five-year revision period is applied to the renovation works, this could lead to a different tax treatment of those investments compared to a VAT taxpayer who has invested in the construction of a new building (15-year period), even if, given their economic characteristics, these investments are similar or even functionally identical.

Whether the building qualifies as a ‘new’ building for VAT purposes for the purposes of its supply, is irrelevant to the determination of the review period.

And finally, the Court confirms that if a Member State (in this case Belgium) erroneously does not classify such works as immovable capital goods, then a VAT taxpayer can rely directly on the VAT Directive before the courts in order to consider the works in question as immovable capital goods to which the extended revision period (in this case 15 years) applies.

Possible consequences

This Court ruling (C-243/23 dated 12.09.2024) may be of interest to VAT taxpayers who have exercised the so-called historical VAT deduction in recent years because their activity was initially exempted by article 44 of the VAT Code, but at some point became taxable with VAT. It is important to check carefully whether the five-year period was not wrongly applied and therefore more VAT could have been recovered. This can still be rectified today, but obviously only insofar as the right to the revision is not yet expired.

Feel free to contact us for assistance in such files. This could include, for example, files where historical VAT deduction was exercised in 2022 on a building whose provision has been considered, since 1 July 2022, as the provision of accommodation subject to VAT and no longer as an exempt real estate rental. But also other cases where the use of a renovated building was changed in 2021 or later, allowing a VAT revision in favour of the VAT payer.

If VAT deducted on renovations has to be partly refunded (e.g. sale with registration duty of the renovated building), this ruling could mean that more VAT has to be refunded than under the five-year review period.

We look forward to the tax authorities’ reaction.

As per annual custom, the tax authorities are also granting postponements for various VAT obligations this summer.

VAT return

The monthly declarations for the transactions of June 2024 and the quarterly declarations for the transactions of the second quarter 2024, instead of being filed by 22 July 2024, must be filed by 9 August 2024 at the latest.

Monthly returns for July 2024 transactions, instead of being filed by 20 August 2024, must be filed by 10 September 2024 at the latest.

VAT refunds

Monthly declarants entitled to monthly VAT refunds (pursuant to licence or start-up scheme) should take into account the following filing dates to avoid delaying the refund:

• declaration for June 2024 operations: submission no later than 24 July 2024;
• declaration for July 2024 operations: submission no later than 24 August 2024.

Also make sure your bank details are known.

European Sales Listing

The European Sales Listing for the transactions of the second quarter 2024 or the transactions of the month of June 2024 must be filed at the latest on 9 August 2024 (instead of 22 July 2024); that for the transactions of July 2024 at the latest on 10 September 2024 (instead of 20 August 2024).

Payments

For payments, the tax authorities do not allow any postponement. Those due dates therefore remain 22 July 2024 (second quarter 2024 or June 2024 declaration) and 20 August 2024 (July 2024 declaration). If the VAT due is not paid on time, default interest will automatically be charged to the current account. Of course, VAT payers may take into account an available credit balance on their current account when making payments.

On Thursday evening, Feb. 1, 2024, the Chamber adopted the draft law that will provide for an obligation to issue structured electronic invoices for many B2B cases as of 2026. Belgian VAT payers who are not themselves subject to this invoicing obligation will also have to be able to receive such structured electronic invoices from their suppliers.

To introduce this obligation, Belgium still needs the approval of the European Council, as the VAT Directive does not allow for such an obligation. The request for this derogation was delivered to the services of the European Commission last October. It is assumed that Belgium will receive this permission because a number of other member states have already obtained such a derogation.

Following thorough discussions within the VAT Committee on the ruling of the European Court of Justice in the Vega case (C-235/18 dated May 15, 2019), Member States have almost unanimously agreed that in a lot of cases the issuer of a fuel card does not supply fuel but provides a financial service (VAT Committee guideline 1068).

However, the card issuer will be deemed to purchase and sell the fuel itself if the following conditions are met:

• The card issuer must take ownership of the fuel – this includes also bearing the financial risk towards the supplier if the cardholder does not pay in the end, also bearing the risk for the losses the cardholder would incur if there were something wrong with the fuel and the issuer setting its own prices towards the cardholder.
• It must be the same fuel that is purchased and sold.
• There must be an agreement between the card issuer and the fuel supplier whereby the issuer acts on behalf of the supplier or on behalf of the cardholder and where there is no reference to the granting of credit or the administration of fuel delivery.

Importantly, these new guidelines do not apply to the past. We can assume that the Belgian administration will adopt and comment on these views in a yet-to-be-published circular within the near future.

For foreign carriers transporting persons in Belgium, the administration introduced a new regime as of 1 January 2014 (decision no. E.T. 122.611 of 20 February 2014). Unless a reverse charge or exemption from Belgian VAT can be applied, under this new special regime, foreign transporters who are liable to pay Belgian VAT on the passenger transport they carry out in Belgium are required to register for VAT in Belgium and submit the specific VAT return on remunerated passenger transport.

With the introduction of the OSS scheme, both intra- and extra-EU VAT taxpayers who are not established in Belgium will be able to report and pay the Belgian VAT they owe on their services to EU-based non-taxable customers through the OSS scheme declaration since 1 July 2021.

The tax authorities have therefore decided to abolish the aforementioned special scheme with specific VAT declaration for salaried persons from 30 June 2023. Carriers not established in Belgium who have to pay Belgian VAT on the passenger transport they carry out in Belgium for customers not subject to VAT will therefore from then on only be able to opt for the OSS scheme or the ordinary VAT registration with periodic VAT declarations.

The circular does not deal with passenger transport carried out in Belgium for a Belgian VAT-taxable customer who does not submit periodic VAT returns, a foreign VAT-taxable person without a liable representative in Belgium or a non-VAT-taxable person established outside the EU. In these cases, the OSS scheme may in principle not be used to report and pay Belgian VAT on passenger transport carried out in Belgium, and the non-resident service provider could therefore only opt for ordinary VAT registration with periodic VAT returns. It is not clear whether the tax authorities would still allow the use of the OSS scheme in such cases.

As of January 1 2023, mixed taxpayers opting to exercise their VAT deduction right under the real use method will have to send a prior notification to the VAT Authorities according to art. 46, §2, al. 1 of the Belgian VAT Code.

This notification will be twofold:

• Firstly, via the forms e604A or e604B respectively related to the start or change of VAT taxable activities
• Secondly, via the communication of specific information foreseen under new art. 18bis, §2of R.D. n°3, at the time of the filing of the first quarterly VAT return (for a quarterly declarant) or of one of the three first monthly returns (in case of a monthly declarant)

Under this new procedure, the VAT Authorities will no longer notify any approval and this prior notification will be sufficient for the taxpayer to start applying the real use method as of the 1^st day of the declaration period in which the notification was introduced.

Timing for the notification

This prior notification has to be made before the end of the period covered by the first declaration of the calendar year (ie. before 31.01 for monthly declarants and before 31.03 for quarterly declarants).

In case of start or change of activity giving a mixed status to the taxpayer, the notification has to be introduced before the end of the first declaration period following the start or change of activity.

This notification will be valid for an undetermined period as from 01.01 of the concerned calendar year or as from the first day of the declaration period following the start or change of the activity but will at least run until the 31.12 of the third year following the date of effect of the notification. Only after this period will the taxpayer be able to exercise again his deduction right under the general prorate method.

In case the taxpayer wishes to stop the application of the real use method, a notification is also to be introduced via the corresponding forms (ie. e-604A or e-604B). This will imply that the taxpayer is no longer allowed to apply the real use method as from the 1^st January of the year following the notification.

Taxpayers already applying the real use method on 31.12.2022 also have to obligation to file this notification according to the same formalities before 01.07.2023.

Refusal and notifications from the VAT Authorities

As indicated here above, taxpayers do not need to wait for any approval from the VAT Authorities to exercise their deduction right according to the real use method. Only a confirmation receipt under .pdf format will be issued by the VAT Authorities based on the data registered by the taxpayers in the notification.

However, when the VAT Authorities consider that the notification does not meet the VAT neutrality principle, they still have the possibility to oppose themselves either to the application of this method either to the criteria determined by the taxpayer for its application. In such case, the VAT Authorities will have to issue a motivated notification of rejection. This motivated denial has to be notified to the taxpayer not later than the 31.12 of the year following the one within which the initial notification took effect. This denial applies retroactively as from the effect date of the initial notification from the taxpayer and for an undetermined period. The absence of such motivated notification within delay does not prevent the VAT Authorities to contest the application of the method by others means, such as during a VAT audit.

Mandatory application of the real use method

While mixed taxpayers wishing to opt for the real use method will have the obligation to file the electronic notification, the VAT Authorities will also have the possibility to impose its application. The VAT Authorities then have to notify their decision, motivation and date of entry into force (ie. first day of the declaration period within which the decision is notified or retroactively in certain circumstances) by registered mail.

On 22 November 2021, the Belgian tax authorities published an addendum to their previous circular of 27 October 2021. This postponed the restriction of the VAT exemption for transport services directly linked to an export of goods to 1 April 2022. Later this restriction was postponed again, this time until 1 September 2022. Now it’s suspended until further notice.

Background

According to Article 146(1)(e) of Council Directive 2006/112/EC of 28.11.2006 on the common system of value added tax, Member States shall exempt the supply of services, including transport and transactions ancillary to transport, but excluding the supply of services exempted in accordance with Articles 132 and 135 of Directive 2006/112/EC, where these are directly linked to the exportation or importation of goods covered by Articles 61 and 157(1)(a) of Directive 2006/112/EC.

In judgment ‘L.C. IK, Case C-288/16, of 29.06.2017, the Court of Justice of the European Union delimited the scope of this exemption with regard to transport services directly linked to the export of goods.

Adaptation of the Belgian interpretation

Circular 2021/C/96 dated 27/10/2021 modifies the application of the Belgian VAT exemption for transport services directly linked to an export of goods.

The exemption for transport services directly linked to the export of goods, provided for in Article 41, § 1, first paragraph, 3° of the VAT Code, can only apply in the relationship between the service provider on the one hand and the consignor or consignee of the goods to be exported on the other hand. More specifically, this concerns:

• the seller or buyer of the goods to be exported
• the owner, the lessee or the borrower of the goods to be exported
• the contractor who exports goods outside the Community for the purpose of repair, processing or adaptation
• the person who re-exports outside the Community goods received on approval, by way of a sample or on consignment
• the person who re-exports goods outside the Community after they have been repaired, transformed, processed or adapted by him.

If the supplier of services uses a subcontractor to supply the service of transporting goods, the service supplied by the subcontractor cannot be exempted from VAT pursuant to Article 41(1)(1)(3) of the VAT Code.

Application circular: suspended

The Circular of 27 October 2021 stipulated that the amendments would enter into force on 1 January 2022. After a first postponement until 1 April 2022, in order to give the taxable persons concerned the opportunity to comply with the limitation of the scope of application of the exemption in respect of goods transport services, the entry into force was postponed again, this time until 1 September 2022.

But now the VAT administration has decided to suspend the implementation of the restriction of the VAT exemption. Various European bodies will be consulted first on the aforementioned issue in order to ensure a uniform application among the Member States of the exemption in question.