Belgium: VAT changes for 2023

The Belgium Parliament approved significant new amendments to the VAT registration and to VAT regime on 10 November 2022. These updates have been effective since 1 January 2023. Has your business adapted accordingly to meet its VAT obligations, VAT regulations, or is it time to do some VAT compliance catch-up? Here's what you need to know. 

Changes to the VAT statute of limitations

The first noteworthy change revolves around the statute of limitations and focuses on two specific use cases; 

1. In the event of fraud, the statute of limitations changed from seven to ten years. Therefore, the tax authorities can investigate and audit any suspected tax liabilities during this period of a taxable person. 
2. In case of a late VAT submission or the absence of VAT return submission, the statute of limitations is now four years (previously one year). The period to impose penalties and interests has subsequently changed to four years. 

Extended retention periods

The new amendments also affect the record-keeping length for all (Value Added Tax) VAT in Belgium invoices, books, and other VAT-related documents. To better align the retention period with the new statute of limitations timeline, VAT invoices, books, and other VAT-related documents must now be retained for ten years instead of seven. 

Interest rate amendments

Additional changes in the Belgian VAT code law include amendments to the interest rates applicable to late payments of VAT in Belgium and VAT refund amounts. Moving into 2023, there is a set VAT interest rate of 8% per year for all payable VAT rates. This interest rate is calculated based on the base interest rate and then increased by four percentage points. For 2023, the late interest rate is established at 4%. Therefore, Belgium's total late interest rate will be 8% for 2023.

Refundable VAT amounts are 6% per year. These new rates can still be updated yearly. However, the interest rate for refundable VAT will always be two percentage points lower than the amounts for VAT-payable. 

The updated reverse charge mechanism

A reverse charge refers to the ability to transfer VAT liability from the seller to the buyer. Suppliers often use the reverse charge mechanism to avoid the need to register for VAT and account for VAT in a Member State which is not their place of establishment. From 1 January 2023, the reverse charge will always apply when a Belgian-established company performs construction supplies on immovable property. 

However, for those with a VAT number, this is provided that the customer submits a periodic VAT return and has a Belgian VAT number. In addition, it's also important to note that if the customer is not obliged to submit a regular VAT return but has a Belgian VAT number, the domestic reverse charge does not apply. 

Suppose a customer has not informed the supplier whether or not they must submit VAT returns. In that case, the supplier must submit a statement on the invoice indicating that the client has one month to contest the invoice in writing including the name, address and the VAT registration number of the supplier (or member of the VAT group) on the invoice. If the customer does not contest the invoice within this month with no further clarification, the customer (taxable persons) are liable for paying the tax according to the Belgian Tax Authorities regulations and any applicable penalty of the taxable person.

The company is obliged to file electronically, once a year, a statement of customers identified for VAT purposes in Belgium by 31 March of the following calendar year at the latest.

The impact of the new reverse charge on foreign VAT

In the past, the reverse charge only applied to non-established companies in Belgium registered for VAT in Belgium via a fiscal representative. However, the recently provided clarification regarding the reverse charge in construction services brings further changes to the impact of the reverse charge for non-established company VAT registered in Belgium. As a result, the reverse charge in construction services applies when the customer is a non-established company that is VAT registered in Belgium, regardless of whether this is a direct registration via a fiscal representative. 

Navigate VAT changes with VAT IT

Deciphering the changes and what it means for your business can be challenging without a team by your side to keep you on track. Make sure you navigate VAT in Belgium with ease and confidence with VAT expert guidance (VAT Group) at your fingertips.