Following the law of 27 December 2021, a new procedure for exercising the input VAT deduction based on the real use method will apply to mixed and partial taxpayers from 1 January 2023. A new Royal Decree dated 26 October 2022 has defined in detail the implementing measures for this new procedure. With these new provisions, the rules will become much more formalistic: prior notification, detailed information to be communicated with the VAT return, the introduction of strict deadlines. A retroactive application of the real use method is no longer possible if the formalities are not complied with correctly or in due time. Moreover, the administration itself retains the option of retroactively refusing or adjusting the application of the real use method.
As stipulated by the law, in existing cases, a notification, with detailed information, must be communicated by no later than 30 June 2023. Failure to comply with this obligation will lead to a (temporary) rejection of the real use method’s application. In doing so, it is envisaged that the VAT authorities will review current practices and possibly correct them. In our opinion, mixed and partial taxpayers who currently apply the real use method should thoroughly (re)examine their current situation in the light of these new obligations.
The enclosed newsletter summarises the new rules with an initial comment on the possible consequences.
In our view, these new rules will have a significant impact on all sectors with mixed or partial VAT obligations, such as real estate, financial services, public authorities, education, medical services, holding companies, etc.
For these new stricter rules, the Tiberghien VAT team can assist you with examining your VAT status and exercising the right to deduct input VAT.