CHARGEABILITY OF VAT – ADDITIONAL DELAY FOR 2014
16 October 2013
Belgium’s requirements regarding invoicing for VAT fundamentally changed as of 1 January 2013 (law of 17 December 2012, Belgian State Gazette 21 December 2012). The changes were made to align with European Council Directive 2010/45/EU of 13 July 2010.
However, because of practical difficulties experienced by taxpayers related to the new rules as they apply to determining the taxable moment, transitional rules (described below) were put in place. These transitional rules were supposed to end 31 December 2013. (Decision no. E.T. 123.563 of 19 December 2012).
Under pressure from some sectors – and because of continued practical difficulties – the transition period was extended through 31 December 2014. However, the practical effect of this extension still has to be determined.
The law amendments as per 1 January 2013 resulted in a substantial modification of the notion “taxable event” and “chargeability of VAT”. For instance, the issuance of an advance invoice is no longer cause for the chargeability (or deductibility) of VAT.
AS A REMINDER: CHARGEABILITY OF VAT
Principle: moment in time of delivery or provision of services
As a rule, the taxable event for VAT purposes is considered the time when the supply of goods or the provision of services takes place. As a result, the VAT is due at the moment the goods are delivered or the service is completed. However, as explained below, there are a number of situations where this principle is varied.
If advance payments are made prior to the delivery of goods or the provision of services, the VAT becomes due at the moment that the advance payments are received in accordance to the amount that is received.
Advance invoice: NO LONGER a cause for chargeability as from 1 January 2013
Under the old rules (in other words, those in effect before 1 January 2013) when an invoice (whether for the total price or just part of the price) was provided in advance of the supply of goods or services, the VAT already became chargeable. The rule was changed effective 1 January 2013 and so, under the new rules, the issuance of an advance invoice is no longer a cause for chargeability of VAT.
This means, on the one hand, that a taxpayer in receipt of an invoice that contains a reference to a VAT amount cannot exercise his/her right to an input VAT deduction before the supply or the payment has actually taken place, because the VAT was not due yet. But, it should also be pointed out that the individual that makes the VAT entry on an invoice (or on an equally valid document) owes this VAT at the moment the invoice or document is issued, even if that individual has not yet delivered any goods or provided any services. (Article 51, § 1, 3° of the Belgian VAT Code).
Transition period until 31 December 2014
During the transition period (in other words, until 31 December 2014) the supplier or service provider can choose between the application of the old rules (that is, the VAT is mentioned separately on the invoice related to the advance payment and it is accounted for immediately) and the new rules.
If a supplier or service provider does not want to account for the VAT on the requested advance payment immediately in other words, the supplier wants to continue to apply the old rules any request for an advance payment must be made by means of a separate document (something other than an invoice) and that document cannot include any mention of VAT. For example, the invoice cannot specify a VAT rate or separately mention a VAT amount.
For customers, this implies that if VAT is charged on an advance payment invoice (old rules) the VAT is immediately deductible. Under the new rules, however, the customer can only deduct the VAT if the VAT has become due (in other words, if the taxable moment has occurred) and the customer is in possession of a proper VAT invoice from the supplier/service provider.
It should be noted that with regard to the moment that VAT becomes due, there are also a number of special rules, for example, rules governing the on-going and continuous supply of goods or services and with regard to the (deemed) intra-Community supply of goods to another Member State.
Should you have any further question or should you require a personal advice with respect to the impact of these rules on your company, please contact your usual contact person at BDO or you may send an email to [email protected] for the attention of one of the members of the Competence Center VAT:
- Erwin Boumans, 02/778.01.00
- Pascal Dauw, 09/210.54.10
- Kaatje Bondewel, 02/778.01.00
- Brigitte Braeckmans, 03/230.58.40
- Joëlle Teuwen, 081/ 20 87 87