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 1st 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 1st 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.
Article 41, § 1, 3° of the Belgian VAT code implements a VAT exemption for services directly connected with the export of goods from Belgium or another EU member State to a place outside the EU VAT territory.
On 29 June 2017 the European Court of Justice ruled (C-288/16) that this VAT exemption could not apply where transport services are not provided directly to the consignor or the consignee of those goods.
As from 1 January 2022 the Belgian VAT authorities will align with this point of view and as a result the exemption foreseen in article 41, § 1, 1ste lid, 3° Belgian VAT code will no longer apply on a transport service provided by a subcontractor.
As a small but ambitious company in the niche sector of specialty chemicals, Eurikas is looking for quality customs and VAT advice at a fair price. Founder Peter Roggeman and his team have been calling on the expertise of Customs Square and Vatsquare for several years now. And he is very satisfied with this.
Can you briefly outline the history and activities of Eurikas?
Peter Roggeman: “After a career of over 20 years at the American company Michelman, where I was commercial director and managing director Europe, I started Eurikas in 2013. I did so together with a New Zealand partner with extensive international experience. Like Michelman, we operate in the niche sector of specialty chemicals, manufacturing products for a wider range of sectors: inks and coatings, asphalt, packaging, textiles, agriculture,…”
“Despite our small team with only 6 employees, we are active around the world, focusing on Europe, the United States, Brazil and Japan. We purchase a lot of material outside of Europe, mainly in the US, Japan and South Korea.”
In terms of approach, what differentiates you from direct competitors?
“We are an asset-light model, which means we have no assets and develop our own products. To do this, we work with an American partner who develops the formulations, then we have them produced in Europe by three other partners. Working with external, freelance parties – including agents – gives us the opportunity to adapt very quickly to changing market conditions and customer demands. That agility is one of our great strengths.”
How and since when did your collaboration with the specialists from Customs Square and Vatsquare start?
“Because of our international activities, we have four VAT numbers – Belgium, the Netherlands, Switzerland and the United Kingdom – and are regularly confronted with tricky VAT issues. Because of the complex and rapidly changing VAT legislation, a few years ago our external auditor advised us to use Vatsquare for VAT support. That cooperation – with VAT expert Steven Didden as our central contact – is running very smoothly. Steven always helps us tremendously and succeeds in explaining the complex VAT rules in understandable language.
A few years ago I was also looking for a professional consultancy firm to deal with customs matters. When I met Linda Fierens from Customs Square two years ago during an afternoon of studies by her Vatsquare colleagues, we immediately clicked. That’s why we decided to start working together to keep our customs files on track.”
How is the collaboration with Customs Square going?
“Just like with Vatsquare, the collaboration with Customs Square is going very well. Linda combines a no-nonsense and direct approach with enormous experience in the area of customs-related issues. Thanks to her career at the FPS Finance and Geodis, among others, she not only has an enormous professional network, but she also knows all the ins and outs of specific customs topics. Moreover, she is always available, which is an important added value for our flexible team.
We wanted to submit a request for suspension of customs duties for a specific case. Together with her team, Linda succeeded admirably in handling this file successfully. As a result, we will be able to realize additional margin as of January 2022. For us this is once again proof that investing in a professional consultancy firm more than pays off!
Besides this case, Linda also expertly assisted us during meetings with our freight forwarders from Asia, because there were some questions about our invoicing. Here, too, her advice was more than helpful in addressing these conversations in a constructive manner.”
How do you see the collaboration with Vatsquare and Customs Square evolving in the future?
“Because both VAT and customs rules are constantly changing and becoming more complex, it is impossible for a non-specialist to continue to see the forest for the trees. The synergy between Vatsquare and Customs Square is an absolute strength of this tandem. With our Eurikas team, it is very reassuring to be able to call on experts who are always ready to help us and who closely follow the regulations. And last but not least, my colleagues and I regularly learn something about (new) VAT and customs topics, which puts us in a stronger position when negotiating with suppliers or customers.”
More info: www.eurikas.be
Until 30 September 2021, a reduced VAT rate of 6% will apply on restaurant and catering services in Belgium. The measure will take effect as soon as the restaurant and pubs may open again.
Not only the food and non-alcoholic beverages, but also the alcoholic beverages, will benefit the VAT reduction.
Because of the coronacrisis the Belgian tax authorities granted several deferrals for the VAT obligations (return, intracommunity sales listing, annual sales listing, payment of VAT).
The government has announced that as of the transactions of May 2020, no deferrals will be granted.
This means that at latest 20th June 2020:
the VAT return for the transactions of May 2020 must be filed;
the intracommunity sales listing for the transactions of May 2020 must be filed;
the payment of the VAT resulting from the transactions of May 2020 must be paid.
Taxpayers filing monthly VAT returns that are allowed to get monthly VAT-refunds (starters and permit holders), need to file their VAT return for May 2020 also at latest 20th June 2020, if not the reimbursement of the VAT credit will be delayed.
Taxpayers that have terminated their VAT activities after 30th April 2020 need to file their last annual sales listing within three months counting from the date the VAT-activivities were terminated.
When VAT taxpayers regularly import goods from outside the EU in Belgium, they can request a permit (ET 14.000) allowing them to defer the payment of import VAT to their Belgian monthly or quarterly VAT return. In that same return they can report the deductible VAT. So if the import VAT is fully deductible, this permit eliminates the pre-financing of the import VAT.
Due to the current situation with the spread of COVID 19, the Belgian VAT authorities have decided that all forms relating to this permit ET 14.000 (e.g. application and termination) have to be mailed on the following address: et14000@minfin.fed.beFOD Finance, news 24 March 2020
Due to the problems from the spreading of the coronavirus, the Belgian tax authorities have foreseen that taxpayers can request the following VAT measures:
payment facilities;
waiver of late payment interest;
waiver of penalties for non or late payment of VAT.
Today the tax authorities announced the following additional VAT measures regarding the basic VAT obligations.
Periodical VAT return and intracommunity sales listing
return/listing of February 2020, filing by 20th March 2020: extended until 6th April 2020;
return/listing of March 2020, filing by 20th April 2020: extended until 7th May 2020;
return/listing of first quarter 2020, filing by 20th April 2020: extended until 7th May 2020.
Monthly refund of VAT credit
Starters or permit holders for a monthly payment of VAT credits that want their VAT credit refunded on a monthly basis need to file their periodical VAT return at latest the 24th day (instead of the 20th) of the month following the tax period (e.g. VAT return of February 2020 needs to be filed at latest 24th March 2020).
VAT payment
The tax authorities grant an automatic delay of the deadline for VAT payments of two months (no penalties or late payment interest due).
VAT return of February 2020, to be paid by the 20th March 2020: extended until 20th May 2020;
VAT return of March 2020, to be paid by the 20th April 2020: extended until 20th June 2020;
VAT return of first quarter 2020, to be paid by the 20th April 2020: extended until 20th June 2020.
Annual sales listing of taxable customers
The annual sales listing for supplies to Belgian VAT registered customers in 2019 needs to be filed at latest 30th April 2020 (instead of 30th March 2020);
For taxpayers that seize their VAT activities this sales listing needs to be filed at latest at the end of the fourth month following the month in which the VAT activities were seized.
