Draft Royal Decree and VAT registration via fiscal representative
The Belgian Tax Authorities recently released a draft Royal Decree which contains measures to implement the new VAT legislation for cross-border B2C e-commerce activities, as well as amendments to the VAT registration via fiscal representative (see section 1. below).
On a different note, the Belgian Tax Authorities expect to be able to confirm the VAT registration requirements for UK businesses (see section 2. below).
1. Draft Royal Decree
The new VAT legislation for cross-border B2C e-commerce activities was adopted in March 2021 and transposed the relevant EU Directives into Belgian Law (i.e. Council Directive (EU) 2017/2455 of 5 December 2017 as regards certain value added tax obligations for supplies of services and distance sales of goods; and Council Directive (EU) 2019/1995 of 21 November 2019 as regards provisions relating to distance sales of goods and certain domestic supplies of goods). The draft Royal Decree will provide for measures necessary to implement the above referred legislation and will generally enter into force on 1 July 2021. It is available via the website of the Belgian Tax Authorities here in NL / FR.
In addition to the e-commerce measures, the draft Royal Decree contains amendments to the guarantee requirements for VAT registration via fiscal representatives (“aansprakelijk vertegenwoordiger/représentant responsable”). As opposed to the rest of the Royal Decree, these amendments will enter into force on 1 October 2021 and include especially the following:
- Amount of guarantee: To ensure an effective collection of taxes, penalties, interests and costs via a fiscal representative or intermediary, a guarantee must be provided. Currently, the amount of this guarantee is calculated as 25% of the VAT due for a 12-months period, whereby the minimum amount is set at EUR 7.500, but no ceiling applies. Based on the proposed amendment, the amount of the guarantee will be calculated as 10% of the VAT due for a 12-months period, whereby the minimum amount will remain EUR 7.500, but a ceiling of EUR 1.000.000 will apply. Hereby, it must be noted that the possibility to negotiate a lower amount of guarantee will no longer be available. The amount of the guarantee will always be calculated based on the prescribed rules.
- Group-company as fiscal representative: Currently, when a group-company is assigned as fiscal representative, it is possible to be released from the guarantee requirement. This possibility will however be ceased, and a guarantee will be required in all cases as from 1 October 2021.
- Revision of guarantee: While the current rules facilitate a revision and adjustment of the amount of the provided guarantee, the Belgian Tax Authorities seldom apply this facility. Based on the proposed amendment, this practice is likely to change. The amount of the guarantee will be set for a period ending on 31 December of the second year following the year in which the guarantee was provided. At the end of this period, a downwards adjustment of the guarantee can be requested by the fiscal representative/intermediary, and an upwards adjustment can be initiated by the Tax Authorities.
2. VAT-registration of UK businesses
UK businesses without a Belgian fixed establishment are said to remain eligible for direct VAT registration in Belgium. The announcement of the European Commission’s decision and an official confirmation by the Belgian Tax Authorities are expected soon.
Until 31 December 2020, UK businesses which made VAT-taxable supplies in Belgium but did not have a fixed establishment here, had the option to either register directly for VAT in Belgium or via a fiscal representative. However, the availability of the option for direct registration became unclear after Brexit.
Based on the Belgian VAT Act, registration via a fiscal representative is not obligatory for (i) EU established businesses; and (ii) businesses established in a country with which a qualifying mutual assistance agreement for the recovery of claims relating to taxes, duties and other measures is concluded (e.g. Norway). Businesses of such countries have the option for direct VAT registration, in which case they are not required to provide a guarantee.
While the Trade and Cooperation Agreement between the EU and the UK contains a “Protocol on Administrative Cooperation and Combating Fraud In The Field of VAT And On Mutual Assistance for the Recovery of Claims Relating To Taxes And Duties”, the European Commission has not decided on the scope of this protocol in the above context. Pending the Commission’s decision, the Belgian Tax Authorities announced earlier that directly registered UK businesses (without a Belgian fixed establishment) can keep their direct registration and are not required to appoint a fiscal representative. Also, UK businesses (without a Belgian fixed establishment) applying for VAT registration, remain temporarily eligible for direct registration.
The European Commission is now expected to release a formal decision whereby the UK will enjoy the same status as Norway for VAT registration purposes. Accordingly, UK businesses will not be required to appoint a fiscal representative. The Belgian Tax Authorities will make the formal announcement on their website after the official decision of the European Commission is published.
How can we help you?
Concerning the relevance of the proposed amendments in the draft Royal Decree and the short timeframe of implementation, we advise you to assess shortly whether the above amendments affect your VAT compliance and take appropriate actions accordingly. If you have any questions on the above or about the practical implications to your business, do not hesitate to contact us.