Belgium: VAT and cross-border B2C e-commerce activities; VAT registration

The Belgian tax authorities released a draft Royal Decree that contains measures to implement the new value added tax (VAT) measures for cross-border business-to-consumer (B2C) e-commerce activities, as well as amendments to the VAT registration rules by a fiscal representative.

In addition, the Belgian tax authorities announced that they expect to be able to confirm the VAT registration requirements for UK businesses.

The new VAT rules for cross-border B2C e-commerce activities was adopted in March 2021 and thereby transposed relevant EU Directives (Council Directive (EU) 2017/2455 and Council Directive (EU) 2019/1995) into Belgian law. The draft Royal Decree provides measures necessary to implement the EU Directives and generally has an effective date of 1 July 2021.

The draft Royal Decree contains amendments to the guarantee requirements for VAT registration via fiscal representatives (aansprakelijk vertegenwoordiger/représentant responsable). These amendments have an effective date of 1 October 2021 and include the following:

• Amount of guarantee: To guarantee an effective collection of taxes, penalties, interest, and costs from a fiscal representative or intermediary, a guarantee must be provided. Currently, the amount of this guarantee is calculated as 25% of the amount of VAT due for a 12-month period, with a minimum amount of €7,500 (but no ceiling). Based on the proposed amendment, the amount of the guarantee would be calculated as 10% of the VAT due for a 12-month period, with the minimum amount to remain €7,500, but with a ceiling of €1 million. There would no longer be a possibility to negotiate a lower amount of guarantee. The amount of the guarantee would always be calculated based on the prescribed rules.
• Group-company as fiscal representative: Currently, when a group-company is assigned to act as the fiscal representative, it is possible to be released from the guarantee requirement. However, under the proposal, this relief from the guarantee rules would no longer be available, and a guarantee would be required in all situations effective 1 October 2021.
• Revision of guarantee: While the current rules facilitate a revision and adjustment of the amount of the guarantee, the Belgian tax authorities seldom apply this adjustment facility. Based on the proposed amendment, the amount of the guarantee would be set for a period ending on 31 December of the second year following the year in which the guarantee has been provided. At the end of this period, a downwards adjustment of the guarantee could be requested by the fiscal representative or intermediary, and an upwards adjustment could be initiated by the tax authorities.

UK businesses without a Belgian fixed establishment are expected to remain eligible for “direct” VAT registration in Belgium. The European Commission’s decision and an official confirmation by the Belgian tax authorities in this regard are expected soon.

Until 31 December 2020, UK businesses that made VAT-taxable supplies in Belgium but did not have a fixed establishment in Belgium had the option either to register directly for VAT in Belgium or via a fiscal representative. However, the availability of the option for direct registration was uncertain after Brexit.

Based on the Belgian VAT law, registration via a fiscal representative is not mandatory for (1) EU established businesses and (2) businesses established in a country with which a qualifying mutual assistance agreement for the recovery of claims relating to taxes, duties, and other measures is concluded (such as Norway). Businesses in such countries have the option for direct VAT registration, in which case they are not required to provide a guarantee.

While the Trade and Cooperation Agreement between the EU and the UK contains a “Protocol on Administrative Cooperation and Combating Fraud In The Field of VAT And On Mutual Assistance for the Recovery of Claims Relating To Taxes And Duties,” the EC has not decided the application or scope of this protocol, and pending the EC’s decision, the Belgian tax authorities announced that “directly registered” UK businesses (those without a Belgian fixed establishment) can keep their direct registration and are not required to appoint a fiscal representative. Also, UK businesses (without a Belgian fixed establishment) applying for VAT registration remain temporarily eligible for direct registration.

The EC is expected to announce whether taxpayers in the UK would enjoy the same status as Norway for VAT registration purposes. Accordingly, UK businesses would not be required to appoint a fiscal representative. The Belgian tax authorities are expected to make the formal announcement on their website after the official decision of the EC is published.

Read a June 2021 report prepared by the KPMG member firm in Belgium