My job is all about delivering creative solutions combined with excellent services to our clients and inspire my team to do the same. Advising clients in the field of indirect tax or defending clients in a tax controversy case is no longer limited to merely rendering the services requested. It is also about thinking ahead on future tax trends, such as digitalization, corporate responsibility, reputational damage.
New Policy on VAT penalties
Minister of Finance Van Overtveldt announced end of June that he instructed his administration to work out a new VAT penalty policy. The current VAT penalty policy indeed imposed very high penalties and did not take into account the nature of the infractions and the good faith of the taxpayer. A new VAT penalty policy has now been published on July 30th 2018.
The most striking novelty is the full remission of certain types of VAT penalties in case the following conditions are simultaneously met:
- it is the first infraction of this nature, in a reference period of 4 years;
- the taxpayer acted in good faith, i.e. the infraction was not committed with the intention of tax evasion or fraud. Good faith is always assumed, the contrary needs to be proven by the VAT authorities;
- an individual and motived request for waiver of the fine is submitted by the taxpayer to the competent authority;
- at the time of submitting such request, the taxpayer must have fulfilled the sanctioned obligation and must have submitted all his VAT returns;
In case these four conditions are simultaneously met, the VAT penalty will always be waived.
The full remission of the VAT penalty however only applies to a specific category of infractions. These are listed in category I in the new published policy and mainly relate to infractions such as non or late filing of the annual client listing, non or late filing of the intracommunity sales listing, incorrect completion of VAT returns, etc.
he new VAT penalty policy also applies to infractions assessed during a VAT audit but which do not have an impact on the VAT position of the taxpayer (i.e. reverse charge situations). Also for these infractions, the VAT penalty will be fully waived if the four conditions are met and provided that the taxable amount of the invoice was reported in the VAT return and bookkeeping. For a second infraction of this nature, the fine will be reduced to 2% of the VAT amount. For the third and next infractions of this nature, the fine will be reduced to 5% (instead of the currently applied 10% to 20%).
For the other categories of infractions, the new VAT penalty policy does not apply. Of course, the already existing possibility to request a reduction or remission based on justified motives (e.g. force majeure – which is also defined in the new policy) remains effective for all categories of infractions. The VAT authorities will take into account the factual circumstances when assessing the request of the taxpayer (e.g. a lower penalty will be applied for not submitting a “nil” VAT return than for not submitting a VAT return wherein amounts should have been mentioned).
The new policy on VAT penalties is even retroactively applicable on all reduction or remission requests submitted after April 1st 2018, for VAT penalties imposed as from January 1st 2018.