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Published:March 20, 2023

Belgium clarifies new VAT deduction regime

Untangle Belgium’s new procedure on VAT deduction with the latest clarifications issued by the Ministry of Finance. Here’s what you missed! 

Belgium clarifies new VAT deduction regime

Simplicity is currency when it comes to VAT procedures. The more clear an understanding you can gather from a specific VAT procedure, the easier it is to drive efficiency, compliance and successful VAT recovery. Hence, the importance of staying up to date with any official clarifications issued by tax authorities and ministries of finance. 

Most recent clarifications delivered from Belgium’s Ministry of Finance include critical information regarding new procedures on VAT deductive. 

The direct attribution method for VAT deduction

Some businesses are regarded as “mixed VAT taxpayers”. This refers to the fact that they supply taxed supplies and exempt supplies. If this is the case, these partially exempt businesses have some limited right to input VAT deductions. To determine the amount of VAT available for deduction, mixed VAT businesses can choose between two regimes; the default general pro rata method (a calculation based on turnover) or the direct attribution (or real use) method.

On 19 January 2023, Belgian tax authorities issued guidance around the practicalities of applying the new rules on the direct attribution method for VAT deduction. These new rules have been in effect since 01 January 2023 and replace the advance approval requirement with a new notification process. As a result, VAT-taxable persons no longer need prior approval from Belgian authorities to apply the direct attribution method. However, there are still specific requirements in terms of notifying authorities. The clarification goes into further detail regarding the mandatory notification requirements. 

Clarifying the compulsory new e-notification requirements

As of 1 January 2023, mixed VAT taxpayers who choose the direct attribution method as their preferred method to determine their input VAT deduction amount are subject to issuing mandatory e-notifications. They must notify tax authorities using electronic form e604 or e604b on the updated MyMinfin module. At this stage, the notification process is relatively straightforward. Taxpayers simply have to indicate whether they have already applied or intend to apply the direct attribution method in the future. 

Deadlines for notification submissions

The deadlines regarding the notification submission process depend on each taxpayer’s filing status. If a taxpayer does not submit by the relevant deadline, they are no longer eligible to make use of the direct attribution method. This will result in having to use the general pro rata (turnover-based) method.

The deadlines are as follows: 



You’re a mixed taxpayer filing monthly VAT returns wishing to apply the direct attribution method by 1 January 2023. 

1 February 2023

You’re a mixed taxpayer filing quarterly VAT returns wishing to apply the direct attribution method by 1 January 2023.

1 April 2023:

You’re a mixed taxpayer who has used the direct attribution method as of 31 December 2022 and would like to continue doing so.  

1 July 2023

Although these changes simplify the process of adopting the direct attribution method for VAT deduction, they cause some concern about the legal certainty around a taxpayer’s deduction position. However, the Belgian tax authorities have introduced a one-year tolerance period as taxpayers adjust to the new procedures. Amongst these new changes, it’s important to keep in mind that Belgian VAT authorities have the right to examine a taxpayer’s reasons for using the direct attribution method. They are also permitted to question the parameters used at any time within the next two years. Ultimately, they have the authority to challenge the use as well as reject it entirely. 

Simplify VAT procedures with VAT IT

In the midst of changing rules and regulations; it’s important to always have a true north you can turn to clarify, simplify and streamline VAT processes. With VAT IT by your side, you can navigate the complexities of the VAT world with ease, knowing you have experts guiding you every step of the way. Curious about how the new rules could impact your business? Reach out to our VAT advisory here and receive innovative, practical business advice that guarantees compliance.



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