Online gambling games subject to VAT
From 1 July 2016 online gambling games become subject to VAT. The VAT exemption of article 44, §3, 13° of the Belgian VAT Code is therefore amended, but the “tax on games and wagers” remains in force.
The Programme law of 1 July 2016 introduces a definition of “gambling and cash games” (new article 1, §14 Belgian VAT Code). The definition as such is not new. It was initially stipulated in Royal Decree No. 45, which is now repealed and replaced by the legal provision in the Belgian VAT Code.
Gambling and cash games that are not supplied electronically remain exempt from VAT (e.g. gambling machines in a casino and lotteries).
For foreign suppliers of electronic gambling and cash games, a Belgian VAT registration may now become mandatory, as electronically supplied services are taxable at the place where the end-customer (private individual) resides. As an alternative, these foreign suppliers could submit MOSS-returns in another EU Member State. This requires, however, that the supplier is already registered for VAT purposes in that Member State.
The new legislation also introduces joint liability. In other words, the end-customer (private individual) can be held liable to account for the Belgian VAT due if the foreign supplier of electronic gambling games has neglected to account for the Belgian VAT (via a Belgian VAT return or a MOSS-return).
VAT exemption for actors of the sharing economy
The sharing economy has known a strong growth over the past years; hence a legal arrangement became necessary.
Sharing economy (also known as ‘shareconomy’ or ‘collaborative consumption’ or ‘peer economy’) is a hybrid market model which refers to peer-to-peer-based sharing of access to goods and services. Think of the local gardener who is looking for an extra income and for a small fee providing services to individuals, or the lending of cars or bicycles ... outside a professional context. An (electronic) platform brings these people together.
Private individuals active in the sharing economy do not need to register for VAT purposes, on condition that they exclusively render services located in Belgium to other private individuals for private use.
The new regulation is subject to certain conditions: the services must be offered through an electronic platform which is recognised by the government, the fees may only be paid by or via this recognised platform, and the turnover may not exceed 5,000 EUR per calendar year.
If one of the above conditions is no longer met, or when the annual turnover exceeds 5,000 EUR (an exceptional overrun of maximum 10% is allowed), a VAT registration and affiliation with a social security fund for self-employed becomes mandatory. Note that as long as the annual turnover does not exceed 25,000 EUR, it is possible to benefit from the VAT scheme for small entrepreneurs, and thus the administrative burden remains to be limited.
Publicity prints on vehicles
Publicity prints on vehicles have become 100% VAT deductible (effective from 15 June 2016).
The VAT Authorities have announced in the administrative decision no. ET 129.852 of 15/06/2016 to revise their opinion on the VAT deductibility on services for applying publicity prints to cars.
Until recently, the service of placing publicity prints on vehicles (color paints, the company name, a slogan …) was subject to the 50% VAT deductibility limitation as defined in article 45,§2 of the Belgian VAT Code. According to the new administrative decision, the service for placing publicity on cars will no longer be considered as services in connection with the vehicle, but as publicity services instead, implying a 100% VAT deductibility.
The administrative decision mentions that this does not affect the VAT deductibility of the car itself or related expenses in any way.
VAT regime for cost-sharing associations
A “request for information” has been addressed to the Belgian state by the European Commission, regarding the Belgian VAT treatment of cost-sharing associations. Following this request, some amendments have been made to the legislation, taking effect on 1 July 2016 (new paragraph 2bis to article 44 of the VAT Code, and withdrawal of point 1°bis of article 44,§1). The purpose of these amendments is to bring the Belgian legislation in accordance with the European Directives.
A cost-sharing association can be established by either private individuals or legal entities, and can be a separate legal entity or a factual association without legal personality. The purpose of these associations is to combine joint activities in order to reduce the cost for the members of the association (e.g. a group of hospitals that jointly concludes a cleaning contract, due their specific needs). The fee charged by the association to its members is VAT exempt, implying a lower VAT cost for its members.
The conditions for the set-up of a cost-sharing association and for the application of the VAT exemption have now partially been changed:
- It is no longer necessary for the members to be part of the same financial, economical, professional or social group. Instead it is sufficient that they mainly exercise activities that are VAT exempt based on article 44 of the VAT Code (not necessarily exclusively);
- The services rendered by the association must be related to the exempted or non-taxable activities of the members, and must be indispensable for the exercise of those activities;
- In order for the fees to be VAT exempt, they may only represent the reimbursement of combined expenses made by the association. In other words, it is required that the on-charging of expenses occurs at cost, even against third parties;
- The services rendered by the association no longer need to be rendered exclusively to the members. It is allowed to render services to third parties as well. These services will, however, be subject to VAT according to the normal VAT rules. In order to eliminate distortion of competition, it is required that the services be mainly rendered preponderantly to members;
- Finally, it becomes mandatory to inform the local VAT office when a cost-sharing association is being established. All changes in membership or the discontinuation of the association need to be communicated as well. Further practical formalities will be arranged by Royal Decree.
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 the Competence Centre VAT:
- Erwin Boumans, 02/778.01.00
- Brigitte Braeckmans, 03/230.58.40
- Pascal Dauw, 09/210.54.10
- Kaatje Bondewel, 02/778.01.00