A Guide to VAT Rate Belgium and Compliance Requirements
Belgium is known for its delicious chocolates, historic architecture, and vibrant culture. But for businesses operating in this beautiful country, it's essential to understand the intricacies of its tax system, particularly Value Added Tax (VAT). This guide aims to demystify VAT rates and compliance in Belgium, helping businesses navigate the Belgian VAT landscape with confidence.
- Belgium has three main VAT rate categories - standard (21%), reduced (12% and 6%), and zero VAT rate. Understanding these rates is crucial for businesses to apply them correctly and avoid compliance issues.
- VAT registration in Belgium is compulsory for businesses exceeding certain thresholds. The registration process can be completed online, and foreign companies may need a tax representative.
- Belgian VAT compliance involves adhering to invoicing requirements, filing VAT returns, and understanding special VAT rules and declarations such as Intrastat Declarations, EC Sales Lists, and Import VAT Deferment.
Understanding Belgian VAT rates
Belgium has several VAT rates that apply to different categories of goods and services supplied. These rates can be classified into three main categories: standard, reduced, and zero.
Standard rate (21%)
The standard VAT rate in Belgium is 21%. It applies to most goods and services, including electronic devices, clothing, and non-essential food items.
Reduced rates (12% and 6%)
Belgium also offers reduced VAT rates on certain goods and services:
- The reduced rate of 12% is applied to items such as restaurant services, some foodstuffs, certain social housing, and the renovation of private residences (under specific conditions).
- The reduced rate of 6% is the lowest VAT rate and is applicable to essential goods like food, pharmaceutical products, books, and water supplies.
Zero VAT rate
In some cases, a 0% VAT rate, also known as the zero rate, applies to a limited number of goods and services. For example, pro bono legal services and COVID-19 medical devices are subject to this 0% VAT rate.
It's crucial for businesses to correctly apply these rates to avoid compliance issues and potential penalties.
VAT registration in Belgium
VAT registration in Belgium is compulsory for businesses exceeding certain thresholds or engaging in specific activities. Once registered, businesses are issued a VAT identification number, which is used for all VAT-related transactions.
For ecommerce companies selling to Belgian customers, a €10,000 threshold applies. Once their sales exceed this amount, they must register for VAT in Belgium. Companies can either register directly or opt to use the European Union’s One Stop Shop (OSS) regime, which simplifies VAT registration across multiple EU countries.
The Belgian Tax Administration has an official website where the VAT registration process in Belgium can be completed online. It's a simple and convenient way for businesses to register for VAT. Foreign companies seeking VAT registration must provide evidence of their activity in Belgium. For foreign companies registering through a tax representative, a cash guarantee is required, made via the Caisse des Dépôts et Consignations (CDC).
Belgian VAT compliance and obligations
Upon registering for VAT in Belgium, it becomes necessary to follow the country’s VAT compliance requirements and obligations. These include meeting invoicing requirements and filing VAT returns periodically.
In Belgium, VAT invoices must include specific information, including:
- Seller’s and buyer’s details (names and addresses)
- Invoice number
- Date of issue
- VAT number of supplier
- Description of goods or services
- Unit price
- Applicable VAT rate
- VAT amount
Invoices can be issued in either paper or electronic format, as long as electronic invoices meet certain technical requirements and are stored securely.
Additionally, invoices must be issued in one of Belgium’s three official languages: Dutch, French, or German. By sticking to these invoicing requirements, businesses can make certain their transactions align with Belgian VAT regulations.
VAT returns and filing frequency
Filing VAT returns is an essential part of Belgian VAT compliance. Tax returns must be submitted through INTERVAT, the web application designed for this purpose. It supports online filing and submission of returns. The frequency of filing depends on the business’s turnover and industry, with most companies required to submit returns on a monthly basis.
Businesses with an annual turnover of less than €2.5 million may choose to submit returns on a quarterly basis.
Special VAT rules and declarations
Belgium has numerous special VAT rules and declarations, including the Intrastat Declaration, EC Sales List, and Import VAT Deferment. Understanding these rules and declarations is vital for businesses operating in Belgium to ensure compliance and avoid potential penalties.
Intrastat Declarations are a crucial component of Belgium's trade reporting system. They serve as a means to monitor the movement of goods within the EU and collect valuable statistical data. If your business exceeds specific thresholds in terms of intra-EU trade, you're obliged to submit Intrastat Declarations.
In Belgium, Intrastat declarations must be filed on a monthly basis. They should be submitted before the 20th of each month following the reporting period.
EC sales list
Apart from Intrastat Declarations, businesses engaged in cross-border transactions within the EU must also submit EC Sales Lists. These reports help tax authorities track sales of goods and services between VAT-registered businesses in different EU countries. The purpose is to ensure proper VAT taxation in each country involved.
The EC Sales List can be filed electronically via the Internet portal.
Import VAT deferment
Import VAT Deferment allows businesses to postpone VAT payment on imports until the regular VAT return period, providing improved cash flow and financial flexibility. To take advantage of this deferment, companies must obtain the ET 14000 license in Belgium.
The process of obtaining the ET 14000 license and its benefits can greatly assist businesses in managing their VAT payments more efficiently.
Fiscal representatives in Belgium
Companies from outside the European Union (EU) that want to do business in Belgium are required to appoint a fiscal representative. A fiscal representative is a local entity or individual responsible for handling the company's tax obligations in Belgium.
E-invoicing and digital reporting in Belgium
E-invoicing is being encouraged by the government for wider adoption. This involves the use of digital formats and technologies to create, send, receive, and process invoices, offering numerous advantages, such as cost savings, increased efficiency, and fewer mistakes.
E-invoices for B2G transactions are already compulsory in Belgium and the introduction of mandatory e-invoicing and e-reporting for the B2B sector is planned for January 2024.
Penalties for late filings and payments
Like many other countries, Belgium imposes penalties for late filing of VAT returns, late payments, and misdeclarations, which can include significant fines and legal consequences.
To avoid such penalties, businesses must ensure they comply with all VAT regulations and fulfill their VAT obligations, including timely submission of returns and adherence to invoicing requirements.
It's advisable to consult with tax professionals or seek guidance from the Belgian tax authorities to ensure proper adherence to VAT regulations.
Navigating the Belgian VAT system can be difficult, but it's essential for businesses to operate legally and efficiently. Understanding the different VAT rates, registering for VAT when required, and complying with VAT regulations are all necessary for businesses looking to expand into the Belgian market.
Do you need help with your VAT compliance? Book a free call with one of our VAT experts to find bespoke solutions for your business, optimize your VAT costs, and reach millions of new potential customers.
Frequently Asked Questions
What are the different types of VAT rates in Belgium?
In Belgium, there are three main VAT rates: standard (21%), reduced (6% and 12%) and zero rate (0%).
The standard rate applies to most goods and services, while the reduced rates apply to certain goods and services such as food, books, and medical products. The zero rate applies to exports and certain other goods and services.
Does the UK charge Belgium VAT?
No, the UK does not charge Belgium VAT on goods it sends to Belgium, provided documentary proof of export is kept and the Belgian customer’s TVA registration number (including the BE prefix) is obtained and shown on the invoice.
Is Belgium in the EU for VAT?
Belgium, as with all EU member states, adheres to the EU VAT Directive governing VAT compliance, although it is permitted to establish its own standard VAT rate. The only conditional is that this figure does not fall below 15%.