Case
Your company based in Romania has signed a contract for the supply and installation of hardware materials with a Belgian customer (supply with installation). The materials will be shipped from Romania to Belgium and installed by your company.
Supply with installation – VAT is due in Belgium…
Supply of goods with installation is treated as a single transaction subject to VAT in the country where the goods are installed or assembled. Belgian VAT is therefore applicable on the transaction.
…but VAT registration is not required
Simplification arrangements for supplies of goods installed or assembled in Belgium are however applicable provided the customer is VAT registered in the Belgium avoiding your company to register in Belgium and charge Belgian VAT. Your company is therefore not required to be VAT registered in Belgium and must issue invoices without charging any VAT (local reverse charge – payment of VAT switched to the client).
Supply with installation – Checking the rules in each country
The VAT treatment will be different in case your company has signed the same contract for the supply and installation of hardware materials with a Slovenian client. In this case, your company should be VAT registered in the Slovenia and charge Slovenian VAT to its client. For contracts signed with Spanish clients, VAT registration of your company will be required but your invoice should be charged without VAT (local reverse charge – payment of VAT switched to client).
Companies supplying goods with installation in the European Union must therefore pay attention to the following issues:
- Determine the exact qualification of the transaction. There is a lack of harmonization to determine whether the supply of goods with installation is considered as a supply of goods or supply of services. Submitting a ruling request in order to obtain the official position of the local tax authorities is often required for juridical security purpose.
- Check whether or not special arrangements have been implemented into the country where the goods are installed or assembled;
- In case no special arrangements are applicable, proceed to the local VAT registration.