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.

Please read our VAT news n° 517 “Direct registration versus VAT registration with a Fiscal representative: Which Solution do I best to opt for?” for more information about this topic.

3. VAT Obligations
When VAT registered, foreign companies have to deal with their VAT obligations, i.e. filing periodical VAT returns, keeping of books and records, VAT accounting, issuance of invoices (see VAT News 518), payment of VAT, invoices with mandatory information, etc.
4. VAT Optimization
There are some optimized scenarios available for companies having business in Belgium:
  • 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
VAT incurred on the purchases, importations or intra-EU acquisitions of goods and services may be recovered by a foreign company provided these expenses are intended for taxable activities and at the condition that proper documentation is available.
No input VAT can be recovered on any of the following expenditures:
  • 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.).
A foreign company is allowed to deduct input VAT through periodical VAT returns. It is entitled to recover input VAT for the period in which the invoice is issued. The deduction of input VAT must be documented by an invoice that is issued in accordance with all Belgian VAT requirements.
Foreign companies which are not VAT registered in Belgium are allowed to recover Belgian VAT incurred on their expenses via the electronic procedure as laid down by Directive 2008/9 (for EU companies) or by 13th Directive (for non-EU companies).
In case you wish more information about VAT registration in Belgium, please feel free to contact Bernard Ickowicz ([email protected] or 32 2 351.26.00)