Important changes to the reverse charge mechanism for immovable property works

As from the 1st of January 2023 the reverse charge mechanism of article 20 of the Royal Decree No. 1 will be subject to a major reform.

As from that date, the reverse charge mechanism for immovable property works will apply to every taxable customer who is subject to the filing of periodic VAT returns in Belgium. This also includes the taxable customers who are established outside Belgium, irrespective of whether they are registered for VAT in Belgium through a fiscal representative or whether they only hold a direct VAT identification in Belgium without fiscal representative. Up until now, this reverse charge mechanism was only applicable when the foreign taxable customer was identified for VAT purposes in Belgium via a fiscal representative. In other words: reverse charge did not apply to foreign taxpayers merely holding a direct VAT registration in Belgium.

Those customers who are not subject to periodic VAT filings but who do have a Belgian VAT number that they communicate to their supplier, must also notify the latter of the fact that they do not meet the requirements for the application of the reverse charge mechanism (e.g. customers who are subject to the VAT exemption scheme for small businesses hold a VAT number but do not file periodic VAT returns). Finally, the supplier must also include a specific reference on its sales invoice for the situation where the customer failed to mention that he is not filing periodic VAT returns and is therefore not entitled to benefit from the reverse charge mechanism. The purpose of that invoice reference is to inform aforementioned customer of its personal liability for the payment of the VAT, fines and penalty interest in such situation.  It is recommendable for the supplier to always mention this reference on its invoice in case its customer communicates a VAT number and the reverse charge mechanism is applied.