What You Need to Know About Belgium VAT
Trading in Belgium and other European Union (EU) member countries is lucrative but challenging, especially when done wrong. Find out how to do business right and steer clear of nasty surprises with these six surprising facts about Belgian VAT.
1. It Is Higher than UK’s
The Belgium VAT has the same principle as UK’s—it is a consumption tax charged on goods and services to the final consumer. Businesses do not pay VAT; instead, they remit this indirect tax and report it to the proper authorities.
Although Belgium follows the EU directives on VAT, it remains free to set its standard rate, often above 15%. To date, Belgian VAT stands at 21%, slightly higher than UK’s 20% on most taxable goods and services.
With Brexit in 2020, the movement of goods from the UK to Belgium is considered importation rather than intra-community acquisitions. Hence, imports are subject to Belgian VAT, with the tax due paid to customs.
2. The VAT System Is Tiered
In Belgium, the VAT system consists of different tiers as set by royal decree, with reduced rates applied to specific classifications of products and services. For example, certain foodstuffs are charged with reduced rates of 6% and 12%.
Moreover, a limited number of goods are zero-rated for VAT, while a few are VAT-exempt. There’s a difference between the two—with the former, you still have to charge 0% VAT and report the transaction on your return. With the latter, you don’t need to apply VAT.
If you want to know the correct VAT rate for your goods or services in determining your tax obligation, visit the Federal Public Service Finance of Belgium (FPS Finance) website.
Alternatively, you can work with an accountant well-versed in the Belgian VAT Code, such as from Sterlinx Global.
3. There’s a VAT Threshold
Generally, there is no threshold for non-resident companies providing taxable goods and services in Belgium. However, the rule differs for those involved in e-commerce.
The VAT threshold or the limit where a business is required to register for VAT is an annual turnover of €10,000 for intra-community sales. If you expect yearly sales to be below this, you don’t have to be VAT-registered.
However, it’s better to go through the registration at the onset to avoid complications should your future turnover reach the cap.
4. Registering for Belgium VAT Doesn’t Require a Local Company
If you’re a UK-based distance seller, you don’t have to set up a local company in Belgium to conduct business.
However, you are required to register your business for VAT in the country despite trading online. Doing so means complying with Belgium’s taxation laws and avoiding significant penalties.
Belgium VAT Registration
To be VAT-registered, you must obtain a 10-digit Belgian VAT Number with a ‘BE’ prefix. Apply for one by completing form 604a with the following information:
● Memorandum and Articles of Incorporation
● An excerpt from your business’s national trade register
● Start of trading date
● VAT certificate or certificate showing taxable status
● Proof of activity in Belgium (customer order forms, contract, etc.)
The registration process may take three to four weeks after receipt of the required documents. In addition to completing the VAT registration, non-EU companies selling in Belgium should appoint a fiscal representative.
Although UK-based businesses are exempt from this requirement appointing a representative under the EU-UK Trade and Cooperation Agreement, it’s best to work with one from Sterlinx Global or a tax advisor.
They will be responsible for fulfilling obligations, such as submitting and filing VAT, on behalf of their clients.
As a VAT-registered business in Belgium, you must submit the corresponding VAT return every month or quarter.
Generally, you must file monthly returns on the 20th of the following month for the covered period. For example, the return for VAT-charged transactions in July should be submitted no later than 20 August.
Occasionally, Belgium announces an extension for submitting VAT returns, especially during the summer holidays. During these instances, you can delay the filing but not the payment of VAT due every 20th of the month after the period covered.
Keep in mind that quarterly filings are only possible under certain conditions. Consult with a tax adviser or accountant if your business can qualify for this option.
Periodic VAT returns should be filed via the electronic platform INTERVAT.
VAT Filing Penalties
The penalties for failing to comply with the deadlines are as follows:
● Late filing: €250 per return and per month overdue
● Late payment: 15% of the VAT due plus 0.8% interest per month of delay
Because of the significant fines for non-compliance, it’s cost-effective to use the services of an agent or tax representative.
5. You Can Settle VAT Obligations Online
VAT-registered distance and e-commerce sellers can declare and pay their Belgium VAT via the Import One-Stop Shop (IOSS). It was an electronic portal introduced in July 2021, along with changes in VAT rules for e-commerce.
The IOSS system for VAT covers transactions involving goods imported into the EU, especially ones made through an online platform or marketplace. When you register through the portal, you can use it as a channel for paying the declared VAT.
6. Belgian VAT Compliance Is Complicated
VAT compliance in your home country is already tricky. However, it gets increasingly challenging when it involves another country’s taxation regulations. In Belgium, below are a few of your obligations.
As a business subject to VAT, you should:
● Maintain a record of accounts reflecting the amount declared in the periodic VAT return and substantiated by a document
● Keep separate books for incoming invoices and outgoing invoices, a revenue ledger for transactions without invoice issued, and a centralised ledger if with several places of business
Your obligations include:
● Issue invoices disclosing important details defined in the Belgian VAT Code
● Invoice customers for goods based on the applicable VAT rates
● Keep invoices and copies thereof, accounts, and other records for a minimum of 7 years
Since it can be hard to keep up with compliance, it’s better to have a local accountant or fiscal representative who can manage these obligations for you.
Frequently Asked Questions
When do I register for VAT?
You should apply for VAT registration with the country’s tax authorities before commencing your business activities in Belgium. Failure to do so may result in significant penalties for registering late, even if it was unintentional. Seek assistance from a professional from Sterlinx Global.
Can I compute the Belgium VAT myself?
Yes, you can do the computation on your own. But if you’re unfamiliar with the Belgian VAT Coding, you may end up with inaccurate figures on your tax due and returns. Not knowing how to calculate tax obligations correctly is not a reasonable excuse to pay wrongly.
It’s better to let an accountant or tax adviser handle it.
What happens if I can’t file electronically?
You may be exempt from submitting VAT returns via the electronic platform, given that you lack the necessary technological resources or encounter technical problems. As an alternative, you must file in paper form by accomplishing form No. 625. A paper Belgium VAT return must be delivered by the 30th of the month.
Expanding your market reach to Belgium can be rewarding, especially when there are no surprises along the way.
These six surprising facts about Belgium VAT will guide you for an exciting journey ahead, but let the tax professionals at Sterlinx Global help you navigate through the complexities of local VAT laws.