Belgium: Overview of proposed changes to VAT law
Draft legislation containing various value added tax (VAT) provisions was submitted to the Belgian Parliament in April 2021
Draft legislation containing various VAT provisions submitted to the Belgian Parliament
Draft legislation containing various value added tax (VAT) provisions was submitted to the Belgian Parliament in April 2021.
The proposed provisions would make several changes to the Belgian VAT law.
- Territorial scope: The territorial scope of the VAT legislation would be amended to codify the consequences of the Brexit-agreements. Accordingly, the United Kingdom would be a third country for VAT purposes as from 1 January 2021. However, temporary arrangements apply with regard to Northern Ireland.
- Deemed supplies of commercial samples and gifts: The wording of the current provision would be aligned with that of the VAT Directive to clearly indicate that “small value” concerns commercial gifts, rather than commercial samples. Accordingly, the application of commercial gifts of small value, commercial samples, and certain charitable food and other essential non-food products would not be treated as a (deemed) supply of goods for consideration. Secondary legislation would be expected to specify the scope of this provision, including the permitted value and frequency of commercial gifts as well as the goods excluded from the scope of the provision.
- Exemption for independent group of persons: The exemption for an independent group of persons (IGP) would be subject to further limitations. Under the current rules, the nature of activities performed by members of the IGP is not relevant, provided that a predominant part of these activities is exempt from VAT and/or is not subject to VAT (i.e., out of scope). However, following judgements of the Court of Justice of the European Union (CJEU), the IGP-exemption would only apply to IGPs whose members perform VAT-exempt activities in the public interest (as listed in Article 132 of the VAT Directive). As a result, the IGP-exemption would not be meant to apply to services provided by IGPs whose members provide other VAT-exempt services, such as financial or insurance services.
These proposed changes reflect the CJEU judgements; accordingly, the IGP-exemption would be limited to apply to situations when the predominant part of the activities of the IGP’s members is not subject to VAT and/or is VAT-exempt based on Article 44§§(1)(2) of the Belgian VAT law. The new rule would generally be effective as from 1 January 2022. However, an earlier effective date would apply with regard to:
- IGPs established before 1 July 2021 for services provided to members that joined the group after 30 June 2021—in this case the IGP must apply the new rule to the services which it provides to these newly joined members
- IGPs established after 30 June 2021—in this case the new rules would apply as from the date of the IGP’s establishment
- Exemption for collective investment funds management: The wording of the exemption for collective funds management would be adjusted to include “institutions for investments in debt securities.”
- Call-off stock registers and VAT groups: The creation of a VAT group generally implies that its members lose their status as VAT-able persons to the benefit of the VAT group itself. However, certain obligations would remain with the members, such as requirements for filing the annual client listing and the monthly European sales listing. To provide for consistency, the relevant provisions of the call-off stock regime would be changed to allow a waiver for VAT groups from the obligation to maintain registers on the call-off stocks (and instead impose this task on the individual members of the VAT group).
- Persons entitled to VAT refund: A general legal basis would be created for VAT refund procedures whereby VAT is refunded to a person that is not entitled to the refund under the standard rules. Such procedures are already in place for specific situations (e.g., when goods or services are supplied to diplomatic services), but a codified legal basis is not provided. As for administrative simplification purposes, when it is useful to have procedures whereby VAT is directly refunded to a person that is normally not entitled to the refund (e.g., recognised administrative intermediary), the proposed provisions include a codification of the concept of “persons entitled to VAT refund.”
Other provisions are also adjusted in the proposal (e.g., re-drafting of the provisions on VAT rates), but those changes are viewed as a formality and not expected to change the rules.
Read a May 2021 report prepared by the KPMG member firm in Belgium
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