Update on proposed amendments to the Belgian VAT Act

A simplification is proposed to the administrative requirements for limiting the service provider’s liability regarding the application of the reduced VAT rate of 6 percent to work concerning immovable property in private dwellings. Under the current rules, the service provider is in principle required to request a certificate from its customer whereby the customer declares that the criteria for applying the reduced VAT rate are fulfilled. The proposed amendments abolish the requirement of certification by the customer and replace it with the requirement of declaration by the service provider. Accordingly, the service provider will be required to declare the conditions which justify the application of the reduced VAT rate, on its invoice. When the customer does not challenge these conditions in writing within one month after the receipt of the invoice, the customer will become liable for the correct application of the reduced VAT rate, subject to limitations. This liability extends to the payment of VAT, interest and fines that may be due in case of unjust application of the reduced VAT rate. A declaration will have to be included in each qualifying invoice issued to the customer, irrespective whether the work concerns the same site. The proposed amendments concern four application categories of the reduced VAT rate for work concerning immovable property in private dwellings, as specified by legislation.

The proposal extends the scope of application of the reduced VAT rate to work concerning immovable property carried out for private dwellings of disabled persons by public benefit foundations.

The proposed amendments introduce new provisions to ensure a correct implementation of the place of supply rules for distance sales of goods imported from third territories or third countries when the Member State of importation of the goods is Belgium and the Member State of final destination is another Member State. The proposed amendments aim to remedy the current loopholes in the new Belgian VAT legislation for cross-border B2C e-commerce activities, which was enacted by Law of 2 April 2021. This Law incompletely transposed the relevant EU legislation concerning the aforementioned place of supply rules (e. Council Directive (EU) 2017/2455 of 5 December 2017 as regards certain value added tax obligations for supplies of services and distance sales of goods; and Council Directive (EU) 2019/1995 of 21 November 2019 as regards provisions relating to distance sales of goods and certain domestic supplies of goods). As the current loopholes can cause double VAT-taxation, the new provisions are proposed to take effect retroactively from 1 July 2021 (i.e. from the effective date of the Law of 2 April 2021) to avoid such double taxation.

We continue monitoring the developments on the proposed amendments to the Belgian VAT Act and keep you informed about any relevant updates, esp. the adoption of new legislation. If you have any questions or would like to know more details about the proposed amendments, do not hesitate to contact us.