In Belgium, VAT reporting obligations should in principle be met on a monthly basis. However, if certain thresholds are not exceeded, then these obligations can be complied with on a quarterly basis (option). These thresholds are:
- the annual turnover (VAT excl.) does not exceed EUR 2,5 million per calendar year;
- the intra-Community supplies of goods does not exceed an amount of 50.000 EUR in the current quarter or the four quarters before;
- for the supply of certain goods, namely energy products subject to excise duties, mobile phones, computers, IT hardware or motor vehicles, a specific threshold of EUR 250.000 (VAT excl.) applies.
One of the consequences for opting for the quarterly VAT regime under the current rules is the obligation for “advance payments” of the VAT amount. Such an advance payment is a prepayment of the net VAT amount. Currently these advance payments are based on the net VAT amount resulting from the VAT return of the previous quarter. VAT taxable persons are obliged to pay 1/3 of this net VAT amount before the 20th of the second and third month of the next quarter.
A small example to clarify this:
The VAT return for the first quarter of 2016 (covering the months January, February and March 2016 – to be submitted by 20 April 2016) results in a VAT payable amount of EUR 300 (box 71 of the VAT return). Under the old rules, the VAT taxable person should make an advance payment of 1/3 of the VAT amount due for Q1 2016 (i.e.300 /3 = 100) by 20 May 2016 (second month following the reporting quarter) and by 20 June 2016 (third month following the reporting quarter). The sum of these advance payments (i.e. 100 + 100 = 200) is set-off against the total amount due (box 71) in the Q2 2016 VAT return.
The Belgian VAT authorities monitor the obligation to make these advance payments very strictly. In practice, late payment interest (0.8% per month) can immediately be imposed, even if the payment is only one day late. Of course, this obligation has a huge impact on the VAT cash flow position of (small) companies.
As already communicated by the Belgian Minister of Finance (click here) these advance payments have been under review. Given that the simplification of the VAT obligations for businesses is one of the key-points in the Minister’s policy agenda, it has now finally been decided to abolish these advance payments for quarterly VAT returns.
Starting from 1 April 2017, VAT taxable persons submitting quarterly VAT returns will thus no longer have to make advance payments by the 20th of the second and third month following the previous quarter.
However, as is the case for VAT taxable persons submitting monthly VAT returns, there will be a new obligation for a “December advance payment” by 24 December 2016. This advance payment, which covers a pure budgetary issue, obliges VAT taxable persons to make an advance payment for the last month or quarter of each year. For quarterly VAT returns, this December advance payment can be determined as follows:
- Either the VAT amount due is calculated over the outgoing and incoming transactions over the period 1 October 2017 up till (and including) 20 December 2017. This amount should then be paid by 24 December 2017. It should be included in box 91 of the Q4 2017 VAT return (to be submitted by 20 January 2018)
- Or, the VAT payable amount resulting from the Q3 2017 VAT return is paid once again by 24 December 2017.
This December advance payment will be set-off against the result of the Q4 2017 VAT return. If this VAT return would result in a VAT recoverable amount, the VAT credit could in principle be reclaimed through the Q4 2017 VAT return. A reimbursement will then in principle follow by 31 March 2018.
Source: Royal Decree 16 February 2017 altering Royal Decree nrs. 1 and 24 on VAT and the obligation of making advance payments for quarterly VAT declarers, Belgian Official Gazette dd. 23 February 2017 (click here, p.15 et seq).
For more information:
Stijn Vastmans - Partner (email@example.com)
Gert Vranckx - Associate (firstname.lastname@example.org)