VAT news in brief

The December advance payment for those submitting quarterly returns. 
VAT payers who submit periodic monthly returns are already familiar with the December advance phenomenon, and soon those who submit quarterly returns will also have to keep this requirement in mind. As part of the further simplification of the VAT legislation and administration, the Minister of Finance decided to scrap, as of 1 April 2017, the system of obligatory quarterly advance payments, which was required of those VAT payers who submitted periodic quarterly returns. The idea is that this measure will solve the issue of advance funding for VAT, but you can still pay quarterly advances on a voluntary basis since that date. This means that you can avoid a situation where:

  • at the end of a quarter you are required to pay excessive VAT;
  • and there is a risk that you have used all the payable VAT funds for other purposes.  

However, in order to place those submitting quarterly returns on an equal footing, it was decided that as of this year they would also have to pay a December advance, which must be deposited into the same bank account for Brussels VAT receipts by 24 December, with the usual reference for periodic VAT payments (your VAT number plus two additional figures).  

Whether this means that you must actually pay a given sum into the Belgian State’s bank account will depend on the taxed activities performed/received during the third or fourth quarter. That is because, just like those submitting monthly returns, those submitting quarterly returns can decide for themselves how they calculate this December advance payment.  

The December advance equals the VAT payable during the 1 October to 20 December period.  

Those submitting quarterly returns have two options: they can opt to pay the VAT payable for the 1 October to 20 December period. If you choose this calculation method, then the resultant VAT payable must be filled in in section 91 of the VAT return for the fourth quarter.

  • If the VAT payable for the 1 October to 20 December period is greater than the deductible VAT for that same period, then the difference must be inserted in section 91, and it must be paid by 24 December at the latest.
  • If the VAT payable for the 1 October to 20 December period is less than or equal to the deductible VAT for that same period, then fill in 0.00 EUR in section 91 and no December advance is payable.  

The December advance payment is equal to the VAT paid on the basis of the VAT return for the third quarter. 

The second option for those submitting quarterly returns is to pay the VAT payable on the basis of the VAT return for the third quarter once again as their December advance.

  • If the balance in section 71 of the VAT return for the third quarter is positive, then the same sum must be paid once again by 24 December;
  • If the balance in section 71 of the VAT return for the third quarter is 0.00 EUR or if there is a receivable sum (a VAT refund) in section 72 of the VAT return, then you are not required to pay a December advance to the Belgian State. 

If you select this second calculation method, a sum does not have to be entered into section 91 of the VAT return for the fourth quarter. So those who submit quarterly returns can, just like their monthly counterparts, perform the calculation themselves and see which method for the December advance is most advantageous in terms of cash flow. The advance paid is then offset against the balance of the VAT return payable for the fourth quarter, which must be submitted by 20 January of the following year. It is best to diarise the December advance now so that the payment (where applicable) is not forgotten and you find yourself paying interest.  

In the end, no optional VAT system for property leasing. 
It was announced in the government’s summer agreement that an optional system would be introduced in 2018 for subjecting the rental of property to professionals to VAT. In an earlier article we stated that this measure could consequently offer a future alternative  for avoiding the loss of a VAT deduction when, for example, a property company purchases or builds real estate for the purpose of making it available to an operating company that performs its economic activity on those premises (How the Summer Agreement affects VAT groups. 

But on 23 October we learned that the government had, for both budgetary and other reasons, decided that weekend to quit the introduction of this optional VAT system for property leasing – a move we find extremely regrettable. This means that, as opposed to what was initially announced, it will not be possible to choose, under certain conditions, to subject property rentals to professionals to VAT as of 1 January 2018. To make property leasing subject to VAT (and thus to be able to exercise the right to deduct VAT on costs incurred with respect to that property), you will have to continue using the options already available, such as creating a VAT group or financial leasing.

However, a new government circular is currently being prepared that will specifically provide for making the VAT regime for renting out warehouse space more flexible. That is because to date the taxman has been of the opinion that renting out storage space can only be VAT liable if the building is used solely as storage space (even though case law has frequently called the VAT authorities to order in this respect). Nevertheless, administrative tolerance applies when no more than 10% of the area of this warehousing space is used as an office by those persons tasked with managing the stored goods.

This so-called 10% rule will be scrapped as of 1 January 2018 and replaced by a 50% rule. So when office space is rented out as part of a warehouse, the rental could still be subject to VAT in its entirety when the area or the volume of offices makes up less than 50% of the total area or volume of the building (and can thus result in a right to deduct input tax on the part of the lessor). At the time of going to print the circular had not yet been published, but we will let you know as soon as it appears on Fisconet.   

Clarity from the VAT authorities – penalties resulting from delays in performing agreements qualify as damages. 
In a recent government circular dated 25 October 2017, the VAT authorities highlighted the fact that those sums paid in the form of damages as a result of the tardy performance of agreements constitute ‘damages due to delays’ and consequently do not affect the yardstick for taxing the agreed-to transaction. It is a regular occurrence in, for example, the construction industry that the contractor is required to pay a specific sum recorded in the contract because the performance of the work has been delayed. In practice that sum is deducted from the agreed-to price that the client pays to the contractor.  

The taxman has now underscored the fact that this ‘compensated deduction’ cannot be considered as a price discount on the transaction originally agreed to, which can be deducted from the original yardstick for determining the levy and means that less VAT is payable. In reality it is considered to be damages, which fall outside the scope of VAT and do not affect the yardstick for taxation that was originally agreed to. Let’s say that the agreed-to price is 1,000.00 EUR (excluding VAT) and the penalty for delayed performance is 10%. In practice the client would then pay 1,110.00 EUR to the contractor (1,000.00 EUR + 210.00 EUR VAT – 100.00 EUR default penalty). However the VAT payable and to be surrendered to the Belgian State remains 210.00 EUR.  

Property planning finds itself in turbulent waters
Valuation of a usufruct: in complete (r)evolution?
Much has been said and written in the past few years about the valuation of a usufruct and where the fiscal shoe pinches. An overview of valuation problems, current trends and a look at future property planning is provided below. Valuation of a usufruct Valuation of a usufruct: a changing world Usufruct is one of the oldest property rights known and was already applied in Roman times. Usufr
This difference in treatment needs to be corrected
Benefit in kind on immovable property: tax authority abides by the court ruling (for now)
The Federal Public Service Finance published Circular 2018/C/57 on 15 May 2018 on the flat-rate valuation of the benefit in kind for providing an immovable property or a part of an immovable property free of charge to employees or managers. The flat-rate estimate of these benefits is laid down by the Royal Decree implementing the Income Tax Code 1992 (RD/BITC 92). The Courts of Appeal of Ghent and
The 'use and enjoyment" rules explained
Freight transport and closely associated services: new rules clarified in a circular
On 31 October 2017, (previous) Royal Decree No 57, which deals with the freight transport services Department and related services, was replaced by a new RD which came into force on 23 November 2017. It clarifies the former RD in part while introducing a new rule. In order to clarify and discuss the (new) rules, the tax authorities published an administrative circular in this regard on 31 May 2018
Guidelines
Substantial changes in the obligations for partnerships
The Company Law Reform, published on 27 April 2018, is making a number of changes in the Companies Code and the Code of Economic Law. These new regulations will enter into force on 1 November 2018. A few rules will also change for partnerships. Although some clarifications will still be published, we would already like to provide the following guidelines. Changes in the Companies Code A first
Quickly detect system risks
Without a Legal Entity Identifier your company will not be trading on the stock market in 2018
  As from 3 January 2018, every legal entity that buys or sells financial instruments must have a Legal Entity Identifier or LEI. Legal Entity Identifier A LEI is a 20-digit alpha-numeric code enabling quick identification of legal entities that are active on the (international or local) financial markets. The LEI enables regulators to quickly detect system risks. Registrati
A summary of the main points
Immovable property leases to include VAT
  Although currently there is just a draft bill on this issue, which obviously can be subject to change in the meantime, we would like to summarize the main points of the upcoming revolution in the VAT landscape: immovable property leases may become subject to VAT. History Until recently, immovable property leases have – in principle – been exempt from VAT (section 44, paragr
UBO = Ultimate Beneficial Owner
The UBO register: new disclosure requirements planned for your company’s administrative body
As a result of the insertion of sections 14(1) and 14(2) into the Belgian Companies Code all companies must in the future obtain adequate, accurate and current information about their ‘ultimate beneficial owners’ (UBOs) and record the data in the new ‘UBO Register’, a central register containing data about companies and the natural persons behind them. In view of the unwavering atte
Introduction of the matrimonial property law
Is it the end of the final set-off clause or is it getting new life?
  Much has been said about the final set-off clause in recent years. After the Court of Cassation in 2017 ruled in favour of the tax payer that the claim was deductible in the scope of the payable succession duties, the Flemish regulator decided to come to the aid of the tax authorities by changing the law. What is a final set-off clause and how does it work? Many spouses married un
Also the unequal treatment gets reviewed
Benefit in kind for housing: how to anticipate the higher or lower scenario?
Discrimination as regards the benefit in kind for housing has been highlighted on several occasions. Specifically, it relates to the unequal treatment of the same benefits, whether in terms of provision by a sole trader or provision by a legal person. In the most common cases, the benefit arising from being a limited company is almost four times more expensive taxation-wise than the benefit arisin
To reduce the financial burden
Start-up reduction on social security contributions for self-employed persons
The start-up reduction was part of the 'Summer agreement' and took effect on 1 April 2018. With this initiative, the government intends to reduce the financial burden of self-employed persons in start-ups, who often have low incomes at the start of their activity, thereby stimulating entrepreneurship.  Which self-employed persons are eligible?  The reduction measure applies to all se

Subscribe to our newsletter