Despite the fact that many of us are still in summer (holiday) mode, this article is going to focus on the VAT changes that we could expect in the not-too-distant future. It will provide a brief summary. For a more in-depth examination, you can always contact our VAT team.
Vouchers (1 January 2019)
In June 2016, Europe set out the VAT process for vouchers (Directive (EU)2016/1065 of the Council of 27 June 2016 amending Directive 2006/112/EC regarding the processing of vouchers). The Member States, including Belgium, must convert these new regulations and apply them to all vouchers that are issued after 31 December 2018.
A voucher is a (physical or electronic) instrument that can be exchanged for goods or services. In other words, it is regarded as a full or partial payment for the goods or services. Discount vouchers are not covered by the new rules. The voucher itself, or the corresponding documentation, states the goods or services to be provided or the identity of the potential supplier/provider, as well as the conditions governing use of the voucher.
These new regulations distinguish between single and multiple vouchers with regard to the moment at which they can be redeemed.
- If, at the moment of issuing, it is clear which VAT process should apply to the voucher, where this will take place and how much the applicable VAT rate will be on the voucher amount, this is considered to be a single voucher (e.g. a voucher that offers access to a Belgian spa). The VAT is then payable at the moment of voucher issue as well as on every subsequent transfer according the VAT regime which applies to the relevant supply of goods or services for which the voucher can be redeemed, but not at the moment of actual redemption.
- In all other cases, the voucher is a multiple voucher (e.g. a restaurant voucher that can be redeemed within the Benelux). The VAT is then only payable at the moment of voucher redemption (and not at the point of issue or further transfer), on
- either the item/service that is paid for using the voucher;
- or (if this is not known), the monetary value stated on the voucher or in the corresponding documentation, reduced by the VAT on the goods or service.
We believe that the VAT administration will provide further explanations in this regard in the second half of 2018.
Optional taxation for professional property rental (1 January 2019)
If the draft legislation of 31 July 2018 is approved, the landlord and tenant of a property can opt to subject this rental to VAT, as of 1 January 2019. Various conditions must be fulfilled. For example, the tenant may only use the property for their VAT-registered activities and the option only applies to the rental of new buildings for which VAT on the set-up costs is only payable after 1 October 2018 (with the exception of storage locations). For a more comprehensive discussion of this new, expected, regulation, we refer to our recently published article on this subject.
Mandatory VAT on short-term property rental (1 January 2019)
The same draft legislation of 31 July 2018 also covers the implementation of a mandatory VAT charge on (specific) short-term property rental from 1 January 2019. The rental of conference halls, exhibition spaces, meeting rooms, seminar rooms, etc., which are rented for under 6 months will subsequently be subject to VAT (with the exception of situations such as rental by a recognised youth association). For a more comprehensive discussion of this new regulation, we refer to our recently published article.
Discharge of VAT liability by contractor
On 1 June 2018, draft legislation which set out various VAT amendments was submitted by The Chamber. This draft legislation has now been approved and is being ratified by the King. One of the changes that are envisaged concerns the discharge of liability to fulfil VAT by a contractor when a 'minor company' (Article 56b of the VAT Code) or 'agricultural business' (Article 57 of the VAT Code) provides its VAT number.
What does this actually concern? A Belgian contractor who carries out construction work (or similar processes) for:
- a Belgian client who regularly submits VAT returns, or
- a client who is not based in Belgium who has acknowledged an individual, liable representative in Belgium;
must transfer the VAT for his services to this client.If clients share a BE VAT number with the contractor, they often assume (too quickly) that the client also submits regular VAT returns, even though this is not always the case. A company that is subject to the small business regulation or the extraordinary agricultural regulation, for example, will have a VAT identification number which contains the letters BE even though they do not submit regular VAT returns. The transfer rule cannot then be used, even though the company has shared its VAT number with the contractor.
The VAT legislator is to prohibit small businesses and companies which apply the extraordinary agricultural regulation from sharing their VAT numbers with their contractors on the one hand, to avoid the risk of VAT on the contracting work not ultimately being paid and, on the other, to simplify the application of the transfer rule by contractors. If they do this anyway, the VAT administration will recuperate the owed and unpaid VAT from them alone. From now on, the contractor will be 'out of the frame' (unless there is collaboration between the parties). Comes into force: 1 November 2018 unless the King sets an earlier date for implementation.
Please note that, for a while, there has also been an option to check the Intervat website, using a VAT number, to see whether and how often VAT returns have been submitted by the holder of the VAT number.
VAT deduction for strong drinks
Another notable change which can be found in the draft legislation of 1 June 2018 relates to the VAT deduction for strong drinks, i.e. alcoholic drinks such as cognac, whisky, gin and liqueurs. In the near future, handing out samples of strong drinks and the provision of strong drinks in the context of a tasting will enable VAT deduction on the purchase or intra-community acquisition of these strong drinks. At the moment, VAT deduction on purchase or acquisition is only possible if the strong drink is intended to be sold or, for example, served in the context of a restaurant. This list of exceptions will therefore be expanded as a result of the advertising character of these specific processes. Comes into force: 10 days after publication of the law in the Belgian Official Gazette, i.e. 20 August.
Simplification of the building value return
Anyone who has ever realised a new building will know just how time-consuming and difficult it is to draft the building value return that must be submitted to the VAT administration within three months of the date of pronouncement of cadastral income. This return must still provide a detailed overview of all received invoices (both for services supplied and the purchase of materials), including a clear summary of work carried out by you or family members and processes or work that is yet to be carried out. Alongside this report, all original invoices, plans and specifications must be handed over too.
If the draft legislation of 1 June 2018 comes into force, this onerous, time-consuming and taxing obligation will be simplified. Then, it will suffice to simply provide a few specific details regarding the new building via a special form, without documents having to be sent too. If the administration nevertheless would like to see these documents, they can make a simple request for them to be provided. Just as previously, they must be retained for five years from the date of pronouncement of cadastral income. Comes into force: 10 days after publication of the law in the Belgian Official Gazette, i.e. 20 August.
FAQs regarding the VAT exemption for independent groups of persons
Since 1 July 2016, independent groups of persons who provide services to their members have been able to exempt these services (under certain conditions) from VAT. Previously, there was a similar VAT exemption for 'cost-sharing associations' however an amendment to this regulation was required as Belgium had received comments regarding this exemption rule from the European Commission. The VAT administration set out this new regulation in a comprehensive circular dated 12 December 2016 (AAFisc. no 31/2016). We have already mentioned this new legislation in previous articles (Reference to article: ‘VAT exemption for cost-sharing associations ‘new style’ from 1 July 2016’ and to article ‘New rules for cost-sharing associations - rapid action required’).
Independent groups have had to report to the VAT administration since then. This obligation to report, however, highlighted difficulties with respect to the VAT processes for some collaborative forms which, according to the VAT administration, are not independent groups of persons in the sense of Article 44, §2bis of the VAT code (nor on the basis of the old VAT legislation). In a press release of 31 March 2017, the administration announced that these problems would primarily affect the (para)medic sector. They pledged to identify these collaborative groups and cover them, including the consequences with respect to VAT, in an FAQ which would be published in 'the near future'. We are still awaiting these FAQs and therefore they are worth mentioning.
Author: Evy Maurits