How is VAT accounted for in Belgium?

Belgium is a country known for its high standard of living and the many benefits available to its residents. This country is often recommended as a good place to start a business. Among the advantages for entrepreneurs, the ease of setting up a business and the attractive tax system are referred to. What does this look like in practice? Where to find a Belgian VAT guide?

Mandatory registration for VAT purposes

In Belgium, carrying out a business activity that requires the payment of VAT immediately creates an obligation to register for VAT. The tax authorities require the application for a Belgian VAT number within a maximum period of 30 days after the first taxable activity. A foreign company may register as a non-resident and is not required to set up a local company. Companies originating from within the European Union are also not required to choose a VAT representative who is responsible for paying their tax obligations. However, this is necessary if the entrepreneur is based outside the European Union.

Structure of the Belgian VAT number

The VAT number in Belgium consists of 12 characters. The first 2 are the code BE, which is introduced in accordance with European Union directives to identify the Member State. The BE code is followed by 10 digits, the last 2 of which are the control number. This format of the Belgian VAT number makes it possible to verify its validity. This can be done using the VIES search engine, which allows you to check and confirm the activity of the VAT number issued to you. It can be done for all countries that make up the European Union, as well as Northern Ireland.

Standard and reduced VAT rates

The standard rate of VAT in Belgium is 21% and applies to all goods and services not assigned to lower rates. A reduced rate of 12% applies to selected business activities, including property renovation work, social housing and catering services. Belgium also has a second reduced VAT rate of 6%. It applies to the distribution of water, electricity, natural gas, facilities for therapeutic purposes, and the use of sports, entertainment and cultural facilities. In contrast, a zero rate is applied to medical, educational, sporting and cultural services, as well as those related to banking, insurance and the sale of land and real estate.

Time limits for filing tax returns

As a general rule, in Belgium there is an obligation to submit VAT returns on a monthly basis. VAT-registered entities with an annual turnover of less than €2.5 million. They may submit their VAT returns on a quarterly basis. However, this option does not apply to companies trading in energy products, land vehicles, computers, as well as mobile phones, their components, and accessories. Furthermore, if a company is obliged to submit a monthly recapitulative statement (ESL for short), it must submit its VAT returns on a monthly basis.

Refund of overpaid VAT

If VAT has been overpaid, it is possible to apply for a refund. Otherwise, the amount of the overpayment will be carried forward to the next accounting period. It is worth noting that VAT refunds are not possible for all categories of expenses. Besides, if the taxpayer has a tax debt, the refund will be used first to settle the debt, and only the remaining part will be returned with the relevant explanations regarding the settlement of the overpaid amount.

Professional tax advice

The tax system in Belgium is not one of the simplest. That is why people starting a business in this country can establish cooperation with a specialized company providing tax advisory services. One of the best is INTERTAX, which offers a wide range of tax and accounting services for businesses. To begin with, it is advisable to consult the Belgian VAT guide, which can be found at https://polishtax.com/belgian-vat-guide/. In this way, you will avoid misunderstanding the tax rules and you will not be exposed to the negative consequences of running a business in Belgium.

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