NEW PERMANENT REGULATION ON ADVANCE INVOICES – VAT AUTHORITIES ALLOW SOME FLEXIBILITY
11 December 2014
As of 1 January 2015 the new permanent regulation on advance invoices enters into force. VAT is no longer chargeable on the basis of an advance invoice issued prior to the supplier’s receipt of the payment, nor is it before the chargeable event takes place. At the request of accounting software developers, the VAT authorities are nonetheless flexible in terms of delayed software adaptations.
As a recap, the new tolerance regarding advance invoices (in a B2B context) can be summarised as follows.
Immediate deduction (by the customer) and regularisation/window period of 3 months
- The supplier issues an advance invoice with VAT, which mentions either the probable or ultimate payment date or the probable date of chargeability of the VAT (i.e. the date of supply or completion of the service);
- In case of an advance invoice with VAT charged, the customer can deduct the input VAT immediately, regardless of the payment date, in the month or quarter during which the advance invoice was issued;
- Subsequently, the customer disposes of a period of 3 months (the so-called “window” period) to obtain proof of chargeability. This period starts at the end of the month during which the supplier issued an advance invoice. If no evidence of chargeability (either the payment or the chargeable event) can be provided within this timeframe, the customer has to regularise the initial deduction (in box 59 of the VAT return) by means of box 61 of the VAT return;
- The supplier can choose to either report and pay the VAT (early) based on the invoice date or to report and pay the VAT based on the date of collection;
- Specific regulations have been elaborated for situations where the VAT charged is corrected, the customer files bankruptcy, … .
For supplies of goods or services for which a reverse charge mechanism applies, a similar tolerance has been introduced.
For intra-Community transactions, there are no such tolerances for the supplier, due to the cross-border nature and the correct reporting. For the (Belgian) customer, the VAT authorities do accept the reporting of the reverse charge due on the intra-Community acquisition of goods or services in the month when the advance invoice was issued.
The new regulation imposes new obligations regarding the specific invoicing requirements, the automation process and therefore the accounting obligations for VAT payers.
On demand of accounting software developers, the VAT authorities will allow VAT payers who were not yet able to have their accounting software updated to apply the previous regulation until 30 June 2015.
Should you have any further question or 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 our Competence Centre 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