Belgium is one the smallest, yet the most densely populated countries in the Europe. It is also well known for high living standards and excellent public facilities. Belgium as a country is often referred to in connection with its developed entrepreneurial culture. It is also one of factors contributing to the fact that it is recommended as one of the places to start a business. Before making such impactful decision, it might be wise to become familiar with the basics about VAT in Belgium.
In Belgium one is obliged to register for VAT upon becoming VAT taxable person or entity, as such upon performing any activity that requires entity to pay VAT creates obligation to register for the VAT purposes. Belgian Tax authorities require a submission of application for Belgian VAT number no later than 30 days from the first taxable activity. It is important to remember, that in Belgium voluntary registration is not possible, an entity may register only after creation of VAT obligations. Foreign companies may register as non-residents, without establishing a local company and choosing a VAT representative is not required from entities hailing from European Union. However, Belgian VAT authorities do require a fiscal representative from non-EU entities, which may be a major simplification of the process, as the local legal or physical person will very likely be able to deal with the formalities much smoother. VAT representative would be responsible for settling all obligations that would normally fall on taxable persons in connection with all transactions carried out in Belgium.
Registration can be done through the public website, with foreign companies usually needing to submit documents such as:
- Questionnaire 604a – describing the circumstances of registration
- Copy of Commercial Register excerpt
- Articles of association
- Certificate of registration as a taxpayer – original
- Copy of invoices or orders proving the operations in Belgium
The process of registration is expected to take no more than two months, with usual time not exceeding four weeks.
VAT registration thresholds
There are no thresholds for VAT purposes in Belgium, except for distance sales performed by taxpayer not registered in Belgium, but selling and delivering goods to private individuals from another EU member state with annual value of sales exceeding 35,000.00 EUR.
Belgian VAT number is composed of 12 characters, first two being a Belgian VAT code BE, which is required according to the EU VAT directives to identify the member state, followed by ten digits with the last two being the control number. The validity of the numbers issued in Belgium can be verified through the use of the tool provided by the EU – VIES, allowing to perform checks on the numbers issued by all member states of the EU along with Northern Ireland.
In Belgium ordinary VAT returns are expected to be filed on a monthly basis. VAT registered entities with annual turnover lower than 2,500,000.00 EUR are allowed to make quarterly VAT returns, this option however does not exist for companies with VAT reporting obligations that are involved in:
- Energy products trade
- Computers, mobile phones along with accessories and components
- Land vehicles
Additionally, if an entity is obliged to file monthly recapitulative statement (ESL), then it is automatically also obliged to file VAT returns on the monthly basis.
Vat in Belgium is applied at following rates:
- 21% standard rate – applied to all goods and services towards which lower rates are not applicable
- 12% reduced rate – social housing and some renovation works on immovable property, catering services, certain combustible materials, phytopharmaceutical products, etc.
- 6% second reduced rate – water distribution, devices for therapeutical use, use of venues for cultural, entertainment and sport purposes, supplies from social organisations, electricity, natural gas and heat supplied via heating networks, etc.
- 0% exempt with credit – Intra-community supply and acquisitions, exports, cross-border passenger transportation by plane or ship, supplies to international organisations and diplomats, etc.
- 0% exempt without credit – medical services for therapeutic purpose, services associated with education, sport, culture, banking, social and insurance, interest charges, land and real estate sales, etc.
Please keep in mind, that these VAT rates are relevant at the time of writing this article but may be subject to change or may apply only under specific circumstances, therefore listed items should be treated only as examples. Some items may be only temporarily assigned to certain tax rates with example being import of goods intended to use to combat Covid-19.
Standard rate is also applicable when non-resident companies import goods into Belgium – Belgium import VAT rate is 21% and there are also the relevant Belgian customs duties that must be paid, if applicable.
Customs warehouse and VAT warehouse
When dealing with goods that have passed through customs in the EU, there are two categories to separate them to – the ones that have cleared the customs and the ones that have not done so. For these that have not cleared the customs there are customs or bonded warehouses available and VAT and excise duties will be due only after the goods leave the warehousing regime. Sales of goods within the warehouse are not subject to VAT.
In case of goods that have cleared the customs and already paid the customs duties, a VAT warehousing regime is available. With conditions similar to customs warehouses only certain goods are permitted to be stored within a VAT warehouse.
In case of existing VAT credit, it is possible to claim VAT refund on it. Should one decide not to do so, the credit will be carried over to the next return period. Please keep in mind that claiming VAT refund is not possible or only partially possible in case of some categories of expenses.
Additionally, should any VAT debt or any debt to the Federal Public Service Finance or any third party with the intervention of the Federal Public Service Finance exist, the refund will be first used to settle the debt and only then refunded along with explanation of the circumstances via personal letter.
For anyone hesitating to make a decision about developing a business in Belgium it is recommended to seek aid of experts. There are many Tax agencies and firms providing services ranging from simple advice on the troubling subject to undertaking the role of fiscal representative and many more.