Foreign companies which carry out specific commercial activities in Belgium, may be required to submit VAT returns and consequently have to register for VAT purposes in Belgium. These companies should make sure that the Belgian VAT regulations are respected.
VAT identification is mandatory when the foreign company not established in Belgium carries out transactions for which it is liable for tax (transactions carried out with customers not identified for VAT purposes in Belgium) or for which it must complete reporting formalities in Belgium (intra-Community acquisitions, export supplies, intra-Community supplies, imports followed by an intra-Community supply known as “regime 42”).
There are however derogations or possible scenarios avoiding or allowing a VAT registration.
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, payment of VAT, invoices with mandatory information, etc.
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).