Belgian VAT chain reform as from 2025

Starting 1 January 2025, there will be significant changes to the existing VAT compliance and VAT refund processes, as well as to the VAT procedural rules. These changes are also referred to as the so-called “VAT chain” reform. A first Royal Decree implementing these changes was published on 23 October 2024, which confirmed the entry-into-force date of 1 January 2025 (1 February 2025 for certain rules with respect to the refund).

However, a recent news item published by the Federal Public Service Finance on 22 November 2024 clarifies that there will be a gradual implementation of the new rules between January 2025 and 2026: The new VAT procedure as from 1 January 2025 | FPS Finance

In what follows, we provide a brief overview of the main measures.

Filing of VAT returns

• The filing and payment deadline for quarterly VAT returns will be extended from the 20^th day to the 25^th day of the month following the reporting period. This also applies to the filing of the quarterly European Sales Listings. For taxpayers subject to the monthly VAT reporting regime, the filing and payment deadline will be kept at the 20^th day of the month following the reporting period. The extended deadline will apply for the first time to the returns and listings covering the 4^th quarter of 2024. According to the VAT calendar published on the website of the Federal Public Service Finance, the filing deadline for these quarterly returns and listings is 25 January 2025 (NL: Btw kalender | FOD Financiën / FR: Calendrier TVA | SPF Finances). A remarkable point is that this date falls on a Saturday. Will the current tolerance, whereby the deadline is shifted to the next working day, no longer apply?
• If the VAT return is not filed within 3 months after the relevant return period, the VAT authorities will issue a proposal for a “substitute” VAT return to the taxpayer. This substitute return will assume an amount of VAT due based on the highest of the VAT amounts due that have been reported in the periodic VAT returns relating to the preceding 12 months (with a minimum amount of 2.100 euro). The taxpayer is given a deadline of one month to respond to the proposed substitute return and the only way to do so is by filing the missing VAT return. If the missing VAT return is not filed within that month, the proposed substitute return will be considered final. In that scenario, the only option left for the taxpayer to challenge the return, is by lodging an administrative appeal or through court.
• As from 1 January 2025, the filing of a corrective VAT return will only be possible to the extent that the legal filing deadline (see above: 20^th or 25^th) has not yet expired for the relevant return period. In other words: resubmitting VAT returns for previous periods will no longer be possible. Material errors discovered after the legal filing deadline will have to be corrected through the next VAT return.
• New fines will apply in case of late filing or non-filing. Late filing: 100 euro per month delay, with a maximum of 500 euro. Non-filing: progressive fine of 500 euro to 5.000 euro per VAT return, depending on the number of previous infractions during a 4-year reference period.

VAT payments

• There will be new bank account numbers for VAT payments but they can only be used as from 1 May 2025. After that date, payments made to the old account numbers will be transferred automatically to the correct new account number.
• Introduction of the possibility to pay VAT debts through direct debit but only as from 2026. The bank mandate will have to be activated via MyMinfin.
• New fines will apply in case of late payment or non-payment of VAT: 5%, 10% or 15% on the VAT amount, depending on whether the underlying VAT return was submitted on time.

VAT refund

• Under the current rules, a request for refund in the VAT return applies not only to the VAT credit resulting from the relevant return period but to all accumulated VAT credits registered onto the VAT current account of the taxpayer (i.e. VAT credits carried forward from previous periods because no refund was requested via the VAT return). Under the new rules, a request for refund made via the VAT return will only have effect as regards to the VAT credit resulting from that return (box 72). The refund of VAT credits carried forward from previous periods will have to be requested via a separate procedure, more specifically via the taxpayer’s account on the MyMinfin portal. In this respect, the VAT current account will be abolished and replaced with a new tool for managing the VAT credits, i.e. the so-called “VAT provision account”. VAT credits for which no refund is requested through the VAT return will be registered onto that VAT provision account (i.e. registration on provision account by the end of the 2^nd or 3^rd month following the reporting month or quarter + after a check by the VAT authorities).
  
  Transitional period
  • For VAT returns filed prior to 1 May 2025, the current refund rules remain applicable and VAT taxpayers can still request refund of the accumulated VAT credit on the VAT current account, by ticking the appropriate box in the VAT return.
  • Beginning of May 2025, the balance on the VAT current account for which no refund was requested, will be transferred to the VAT provision account. Refund of the amounts available on the VAT provision account can at any time be requested through the MyMinfin platform and this will be reimbursed within 1 month.
     
• Requesting refund of the VAT credit via the VAT return will only be possible when certain requirements are met: timely filing of VAT return in which refund is requested, timely filing of the VAT returns relating to the 6 months preceding the reporting period, VAT credit amounts to minimum 50 euro, timely communication of valid bank account number to VAT authorities. If these requirements are not met, then the VAT credit will be registered onto the VAT provision account (as explained above).  
• Monthly VAT refund will become the standard for all taxpayers filing monthly VAT returns (so no longer needed to apply for a monthly VAT refund license or to qualify as a starting business). For these monthly filers, the refund of the VAT credit requested via the VAT return, will be performed at the latest by the end of the 2^nd month following the reporting period.
• The specific modalities of the VAT provision account are not fully clear yet. But based on the news item of 22 November, the amounts available on the VAT provision account will be used to offset against VAT debts (“When you file a periodic VAT return, we will use your available provisions to settle the VAT amount due”, etc.)

Procedural measures

• Introduction of a statutory response time of 1 month within which taxpayers must reply to written requests for information by the VAT authorities. This is reduced to 10 days in case the rights of Belgian Treasury would be compromised and/or when the request forms part of a VAT refund audit conducted by the VAT authorities. Failure to respond by the deadline may result in conservatory attachment on the VAT credit. 

Conclusion

Overall, VAT taxpayers will be confronted with stricter VAT formalities and non-compliance may have serious negative consequences (substitute VAT return, inability to request VAT refund, … ). As the entry-into-force dates of the aforementioned changes are rapidly approaching, it is important that taxpayers start to prepare now in order to make sure that the VAT procedure rules will be strictly monitored as from 2025.

If you have any questions on the VAT chain reform, or if you would like to know how this will impact you, feel free to reach out to us.