1. When Do I need to VAT register in Belgium?
Foreign companies which carry out certain commercial activities in Belgium, may be held to submit VAT returns and are consequently obliged to register for VAT purposes. They should make sure that the tax regulations obeyed.
There are various situations where a VAT registration is needed:
- Importation of tangible goods ;
- Constructions or building services provided part of (raw) materials are coming from another EU Member state or provided the client is a foreign company not registered via a fiscal representative or a private individual;
- Sales of goods from inventory physically located in Belgium to other Member states;
- Selling goods to Belgian private individuals through Internet (e-commerce) if the turnover exceeds the yearly threshold of € 35.000.
There are however derogations or possible scenarios avoiding or allowing a VAT registration.
2. Direct VAT Registration vs VAT Registration with a Fiscal Representative
VAT is normally due by the supplier of goods or the service provider (general rule). Where, therefore, a foreign company carries out taxable operations in Belgium for which it is liable for VAT, it must charge Belgian VAT to its client. In order to do so, it must register for VAT purposes either directly or either through a fiscal representative.
Combined with the general reverse charge mechanism applicable in Belgium, the option for a foreign company to appoint a fiscal representative can be useful in order to avoid qa cash flow inconvenience. Indeed, that mechanism makes the client liable for VAT (instead of the supplier) provided the latter is a Belgian business submitting periodical returns or a foreign company identified for VAT purposes in Belgium with a fiscal representative.
3. VAT Obligations
4. VAT Optimization
- Reverse charge mechanism : The generalized reverse charge mechanism has been introduced in Belgium since 2002 and is applicable to all supplies of goods and services that are deemed to take place in Belgium and performed by a taxable person not established in Belgium (i.e. established in another EU Member state or outside the EU) to a customer established in Belgium and filing periodical Belgian VAT returns or not established in Belgium but being VAT registered in Belgium and having appointed a fiscal representative.Please read our VAT News n° 519 Reverse charge Mechanism: How to Apply it? for more info on this topic.
- VAT warehousing arrangements;
- Licence N°ET 14.000 : Specific license for importers allowing to defer payment of VAT due upon importation
5. Recovery of Input VAT
- Entertainment ;
- Accommodation hotel, catering and restaurants, unless (1) the costs are incurred for employees in charge of supplying goods or providing services away from the business premises or (2) the costs are rebilled to other business who in turn supplies the same services;
- Up to 50% of input VAT incurred on passenger vehicles is recoverable. This restriction also applies to VAT charged on the supply of services and goods related to such cars (fuel, maintenance, etc.).