Royal Decree implementing the VAT chain published

A significant change to the operational management of VAT by the Belgian tax authorities (the “VAT chain”) is planned to come into force on 1 January 2025, based on the Law of 12 March 2023 (see previous alert ‘Law amending VAT compliance and refund processes published’).  On 23 October 2024, the Royal Decree with a number of detailed changes for the implementation of the new VAT chain has been published in the Belgian Official Journal (Dutch/French). 

The reform modifies the financial processes relating to the payment and refund of VAT for Belgian VAT registered taxpayers, and updates certain VAT procedural rules. This reform has a significant impact on the way VAT compliance is organised, impacting taxpayers and their service providers.

Key changes on VAT compliance

Submission of VAT returns

The filing deadline for quarterly VAT returns will be extended from the 20th to the 25th day of the month following the reporting period. The filing deadline for monthly VAT returns will remain as the 20th day of the month following the relevant return period.

The current leniency, whereby no late filing penalties are imposed if a VAT return is filed by the 10th day of the second month following the reporting period, will no longer apply.

The tax authorities will be able to propose a substitute declaration three months after the end of the relevant period if the taxpayer has not submitted a periodic VAT declaration. This substitute declaration will use the highest amount of VAT due as shown in the periodic declarations relating to the preceding 12 months, with a minimum amount of EUR 2,100 owed. A specific appeal process is foreseen for taxpayers to object against the proposed substitute declaration.

Payment and refund of VAT

A VAT provision account will replace the taxpayer’s VAT current account, allowing for the taxpayer’s VAT debts to be centralized in the tax authorities’ Federal Integrated Recovery System and Tax-Refund application (FIRST).

Practically, this means that the taxpayer will need to initiate the payment of VAT due resulting from the monthly or quarterly VAT return filed, either from the VAT provision account or from a payment account.  Taxpayers will also be able to pay their VAT debts by direct debit. VAT returns resulting in a credit position will not immediately be available on the Provision account, but subject to a payment decision within a certain delay.

Taxpayers with (cumulative) VAT credits will be able to request a refund using the online MyMinfin portal, instead of requesting such refund on the periodic VAT return. Those submitting monthly VAT returns will be able to request a refund every month without being obliged to obtain a monthly VAT refund license.

An accelerated refund process will be available for taxpayers that have submitted the previous six VAT returns on time. However, if the taxpayer receives a request to submit a substitute return, a refund will only be possible six months after receipt of this request.

Changes to VAT procedural rules

In order to further harmonize the procedural rules regarding direct and indirect taxation, a mandatory deadline of one month is proposed for a VAT taxable person to respond to a request for information. In principle, this response time can only be extended if there are "good reasons," which in practice generally may be agreed with a taxpayer’s local tax office.

The mandatory response time can also be shortened to 10 days if there is a risk to the Treasury, or if the request for information relates to a refund request submitted on a periodic VAT return. If the taxpayer does not respond to the request for information following a refund request within this 10-day period, the VAT authorities will be able to withhold the VAT credit as a protective measure.

Impact

The currently communicated date of entry into force of these changes is fast approaching and certain aspects of this reform will require adjustment to (internal) bookkeeping processes and systems for taxpayers. Businesses who did not start with their preparations, should begin to prepare as soon as possible.