All member states of the European Union (EU) collect value-added tax (VAT), a broad-based consumption tax that applies to many goods and services. Businesses collect and remit it at each step of the supply chain, although the ultimate cost is borne by the consumers who purchase the final product.
The EU has some general VAT rules that apply in all member countries, but those countries also have leeway to set some of their own tax rules and tax rates. If you are selling goods or services in Belgium, you need to be aware of and comply with Belgian VAT rules in order to avoid audits, financial consequences, and reputational damage.
How VAT works in Belgium
In Belgium, VAT is called belasting over de toegevoegde waarde (BTW) in Dutch and taxe sur la valeur ajoutée (TVA) in French.
Belgium has multiple VAT rates for different kinds of goods and services, and companies required to collect VAT must register with the General Administration of Taxes.
Both Belgian and non-Belgian companies may be required to register.
VAT rates
In Belgium, there are four tax rates, including a 0% rate, and some products are exempt from tax. Belgium levies taxes at these rates:
- 21% standard VAT rate: Applied to all goods and services that are not exempt or subject to a reduced rate.
- 12% reduced VAT rate: Applied to certain types of foods, agricultural supplies, some housing-related items, on-premise restaurant and catering food, farm machinery, and some energy products are taxed at this rate (reduced rates on energy products are typically temporary and subject to change).
- 6% reduced rate: Reserved for essential services, including some food products and water supplies, pharmaceuticals and medical devices for the disabled, certain types of media, cultural and sports tickets, hotel accommodations, and bike and shoe repairs.
- 0% rate: Applies to work under qualifying margin schemes, some newspapers, and some forms of intracommunity and international passenger transport.
Exempt items are those that are not subject to VAT, such as financial and insurance services. The small business exemption also allows companies with under €25,000 in revenue to become exempt from VAT obligations (if they meet strict requirements).
These rates differ from those in other countries, and you must know which applies to your transaction so you can charge the correct tax.
Registering for VAT
Many companies that do business in Belgium must register to collect VAT. However, requirements vary depending on whether you have a physical presence in the country.
Resident vs. nonresident businesses
Belgian rules establish that resident businesses — those with some kind of physical presence in Belgium— must register if they have €25,000 or more in annual turnover.
While Belgian companies with taxable turnover below this amount can choose to register voluntarily, they are not required to do so.
Foreign businesses generally must register for VAT in Belgium as soon as they make any taxable sale in the country, as there is no registration threshold for non-resident companies — unless they take advantage of the reverse charge mechanism, the One-Stop Shop, or the Import One-Stop Shop (more on these later).
Companies that sell into Belgium via Fulfilled by Amazon programs may also be required to register.
You must register for VAT in Belgium if:
- You are a resident business with a physical presence and have €25,000 or more in annual turnover.
- You are a foreign business making any taxable sales to Belgian customers.
- You are selling to Belgian customers via a Fulfilled by Amazon program.
How to register
You can register for VAT at the Federal Public Service Finance website. If you are a local business, you can register with your local tax office. Otherwise, you can apply through the Central VAT Office for Foreign Taxpayers (BCAE) in Brussels.
After registering, you’ll be provided with a 10-digit company number. This is used to register you in the General Administration of Taxes, and you will need to activate it using an online form or by paying a fee to hire an accredited business counter.
It typically takes between three and four weeks to fully register, and you can submit the application in Dutch, French, or German, all of which are official languages of Belgium.
Working with a tax representative in EU countries
Non-EU companies registering for VAT in Belgium are required to have a fiscal representative. This is a local representative that shares the responsibility — and liability— for collecting VAT and remitting it when it is due.
When to charge tax
If you meet the criteria for being obligated to collect tax on sales in Belgium, you’ll next need to consider whether your product is taxable and at what rate. In the EU, rules vary from country to country, so be sure to check Belgium’s list of taxable, zero-rated, and exempt products.
If you are required to collect tax in Belgium and the goods and services you are selling are taxable, you should charge VAT to comply with your tax obligations under Belgian law.
Reverse charges
Generally, businesses charge VAT on sales of goods and services, and they are reimbursed for VAT on purchases. However, to simplify the VAT collection process on cross-border sales, a business may be able to take advantage of the reverse charge mechanism.
The EU’s reverse charge mechanism (which applies only to B2B sales) requires a registered business customer to pay the VAT instead of the supplier. The registered business buyer must report the payment on their VAT return. The customer can then deduct any deductible VAT on that same return when it is submitted.
Sellers can send invoices without VAT listed, and buyers self-assess the amount due.
Since the reverse charge allows suppliers who sell to VAT-registered businesses in Belgium (or other countries) to pass their VAT obligations onto the registered business, a foreign seller may be able to avoid having to personally register for VAT in Belgium.
B2B vs. B2C
Your specific tax obligations may vary depending on whether you are selling to a business or to a customer.
If you are selling to a business, the reverse charge mechanism may apply.
If you are selling to customers directly and are eligible, you may want to explore becoming part of the One-Stop Shop (more on this in a later section).
Marketplace facilitators
In some situations, when you sell items on a marketplace like Amazon or eBay, the marketplace becomes responsible for VAT collection instead of you. In the EU, this happens when the marketplace is a “deemed seller.”
This essentially means that the EU is treating the marketplace as the seller for purposes of collecting and remitting VAT. But not every third-party company that facilitates transactions is a deemed seller. The marketplace must play a key role in the sale by doing things like:
- Influencing pricing.
- Assuming responsibility for the delivery of goods or services.
- Collecting payments.
- Offering customer support.
If the marketplace features its own brand more prominently than the seller’s, it’s also likely that it is a deemed seller. If it doesn’t do any of these things, then it may instead be an intermediary that’s not obligated to collect the tax.
You should find out whether your sales are happening through a marketplace facilitator, in which case you will not have to manage VAT on those transactions.
VAT deductions
Input VAT can be deducted from eligible transactions in Belgium. The input VAT must relate directly to taxable activities, and any company deducting VAT must have a VAT-compliant invoice in order to be eligible to claim the deduction.
Belgium’s “Import VAT Deferment”
Belgium operates an Import VAT deferment system.
Under this system:
- Businesses with ET 14000 licenses can avoid paying VAT at the time of each import. While companies can often get the VAT prepayment back if they pay upon import and are eligible, that’s only after filing quarterly VAT returns, so it can result in a lot of money being tied up.
- Import VAT deferment allows importing companies to simply declare the VAT in their monthly or quarterly VAT return instead of the upfront payment.
A business can participate in this deferment as long as one of the following statements is true of the business:
- It is established in Belgium and subject to VAT tax in Belgium or
- It is subject to Belgian VAT tax with a responsible representative, even if the company is not directly established in the country
The company must also have a Belgian VAT number, have fulfilled all VAT obligations, regularly import to Belgium, and periodically file Belgian VAT returns.
If you meet the requirements and participate, you don’t have to pre-finance VAT on goods you are importing, and your goods should clear customs faster.
Statute of limitations
The standard statute of limitations for timely VAT returns that are correctly filed is three years. However, a longer statute of limitations can apply in some circumstances, such as:
- Four years if a periodic VAT return is not filed before the deadline or not filed at all.
- Seven years in some special cases, like when VAT exemptions or deductions are not properly claimed.
- 10 years: This is an extended period that applies only in cases of fraud or intentionally wrongful behavior
Staying compliant
It is very important to stay compliant with Belgian VAT regulations, including those related to invoicing, filing VAT returns and other required forms, keeping records for the required length of time, and complying with all VAT deadlines.
Here are some more key details about how to remain in compliance with Belgium’s rules.
Invoicing requirements
Invoices must include certain required details to be VAT compliant, including:
- Information about your company.
- A sequential number on the invoice.
- Your VAT number.
- The VAT rate charged on your products and services.
- The total amount of all VAT.
Filing VAT returns
Companies that have an annual turnover exceeding €2.5 million must file a monthly VAT return, while companies with sales below that threshold are typically required to file quarterly.
Your VAT return should provide an overview of all VAT you received and paid. You can submit the return online via Intervat before the 20th of January, April, July, and October if filing quarterly.
Filing deadlines
The due date for filing required forms is the 20th day of the month after the end of the reporting period. This applies whether the reporting period is monthly or quarterly.
You are also required to make VAT payment with your submission when filing monthly, while payments for quarterly filings also have to be prepaid monthly.
Risks of noncompliance
Failure to comply with Belgium’s VAT rules can have serious consequences for your company, including fines, penalties, and damage to your reputation. Failure to comply also increases your risk of future audits, which can be expensive and time-consuming.
Unresolved VAT tax liability can also impact your ability to sell your company or to recruit investors.
You should make sure to avoid these serious consequences by understanding the obligations imposed on you under Belgian and EU laws and ensuring you are in full compliance.
Tips on staying compliant with Belgian VAT regulations
The best ways to stay compliant with VAT rules in Belgium include:
- Understanding your obligations, including when you must register, what items are subject to VAT, and what rates you must charge.
- Looking for opportunities to simplify the compliance process by participating in programs like the One-Stop Shop and Import One-Stop Shop
- Finding the right support, including software that can automate your compliance efforts and ensure that you’re fulfilling VAT requirements in Belgium and all the other countries where you do business.
One-Stop Shop and Import One-Stop Shop
Belgium participates in the EU’s One-Stop Shop (OSS) and Import One-Stop Shop (IOSS) systems to simplify VAT collection for companies selling directly to consumers.
The OSS and IOSS were introduced on July 1, 2021. OSS applies when goods or services are sold in intra-EU transactions. IOSS applies to imported goods for sale to customers that are valued at €150 or less.
Under OSS, distant sellers, including those that sell goods online, can register in one single EU member state and manage all of their VAT obligations through that country’s platform. This simple process allows sellers to more easily comply with VAT obligations when selling directly to consumers.
Once companies register in an EU member state and opt into OSS, then whenever they make a cross-border sale of goods, they collect the VAT at the time of purchase. The amount is based on the customer’s location. The registered company reports the VAT transaction through a single centralized return with OSS, and the funds are distributed to the appropriate country.
Implementing a solution
Software solutions can be a great option for companies struggling with tax compliance because they can automate all of the tedious work of staying compliant with Belgium’s tax rules.
For example, Numeral is trusted by companies across the globe to help them stay compliant with tax requirements in dozens of countries.
Numeral can track when you must register for VAT or sales tax in different countries, complete the registration process for you, collect VAT when required, submit required forms, and make payments on schedule.
Numeral even deals with your correspondence from taxing authorities, enables you to meet fiscal representative requirements, and makes it easy to manage sales tax in as little as five minutes per month.
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Final thoughts
Belgium’s VAT rules are complicated, with multiple different rates and unique rules. It’s important that you understand and comply with all requirements when doing business with Belgian businesses and individuals.
Numeral makes it easy to fulfill your obligations in Belgium, other EU countries, and any of more than 70+ other countries worldwide. Contact us today to learn more about how we can help.
