Update on VAT refund procedures and the temporary measure for demolition and reconstruction
Recent developments in the field of VAT include the revised VAT refund procedures applicable as from 1 July 2022 and a circular concerning the extension of the 6% VAT rate in relation to demolition and reconstruction.
VAT refund procedures
To modernise the current VAT refund procedures for VAT taxable persons established outside the EU and to align them with those for taxable persons established in another EU Member State, Royal Decree no. 56 of 17 December 2009 is replaced. The new Royal Decree no. 56 of 10 April 2022 covers the VAT refund to taxable persons established in another Member State as well as the refund to non-EU established taxable persons. Accordingly, the rules for refunds to VAT taxable persons established in a Member State other than the Member State of refund, remain generally unchanged compared to the rules of the old Royal Decree no. 56. (see Chapter 2 of the new Royal Decree). However, in the context of aligning the refund procedures, the Royal Decree is supplemented with new rules for VAT taxable persons established outside the EU (see Chapter 3 of the new Royal Decree). These new rules are important for efficiency gains in the Tax Authorities’ administrative processes, especially in light of the expected increase in refund requests due to Brexit (see also our previous news items of 7 January 2022 and 3 November 2021).
At the same time, Royal Decree no. 4 of 29 December 1969 concerning VAT refunds, and Royal Decree no. 31 of 2 April 2002 concerning the application of VAT to transactions by VAT taxable persons established outside of Belgium, are amended by Royal Decree of 10 April 2022 to align them with the new Royal Decree no. 56.
The new Royal Decree no. 56 applies as from 1 July 2022 with respect to refund requests submitted after 30 June 2022. The amendments to Royal Decrees no. 4 and no. 31 are also effective as from 1 July 2022.
Demolition and reconstruction
The Belgian Tax Authorities published Circular 2022/C/45 concerning the extension of the application of the 6% VAT rate in the context of demolition and reconstruction until 31 December 2023, as provided for in Royal Decree of 27 March 2022. The extension does not affect the terms and conditions of this temporary measure, which was previously applicable until 31 December 2022 (see also our previous news item also our news item of 21 March 2022). Additionally, the Circular contains a clarification to the term “force majeure” used in relation to social rental of dwellings.
If you have any questions on the above, feel free to reach out to us.