Belgium: Additional tolerances for reporting by mixed and partial VAT taxpayers published

Figures 2023 can be reported based on estimates

In an earlier post, the administration announced that there would be a deferral of the reporting requirement for mixed and partial VAT taxpayers. It was announced that the figures did not have to be reported by April 20, 2024, but that there would be a deferral in two phases.

Initially, "estimates" had to be transmitted in the second quarter or June 2024 return. That means: by July 20 (and if the summer regime is used: August 9, 2024). Subsequently the final figures should be communicated in the third quarter 2024 return (Oct. 21, 2024) or November (Dec. 20, 2024).

That second requirement will now be dropped. Thus, figures for 2023 must be reported only on the basis of estimates. The initially announced filing date (July 20 or August 9) will be retained in this regard.

Strongly reduced obligation for partial VAT payers

Partial VAT payers must report their figures in the same way as mixed VAT payers who apply actual use (Art. 18bis, §8 RD No. 3). For them too, there is therefore an obligation to provide a breakdown of the VAT incurred according to the activity for which they use the costs. This raised a number of problems. For example, one might ask whether partial VAT payers are necessarily subject to deduction ratios and how to they need to be calculated. How to quantify free of charge operations using a pro rata (which is fundamentally based on turnover)?

Hence, a very significant restriction of this obligation is now being proposed. Specifically, only "large companies" will have to provide the data. This leaves most non-profit organizations, etc. outside the scope of this obligation.

In addition, public institutions (art. 6 of the VAT Code) that are partial VAT taxable persons are excluded from the obligation. They only have to report data when they are mixed taxable persons and have opted for a VAT deduction in accordance with actual use (and only for these operations). They are exempt from the reporting obligation for the transactions they make as non-taxable persons (outside the scope of VAT).

This is thus a very extensive restriction of the previously announced obligation. In all likelihood, (quasi) only holding companies of large corporate groups will be targeted.

It is announced that this restriction will be allowed "for the next few years as a trial by ministerial tolerance".

Deduction limitations: taxpayer's choice

It was not entirely clear whether deduction limitations must be taken into account when reporting the figures or not. The administration is now announcing that the taxpayer has the choice of whether or not to take this into account.

Example: a taxpayer's professional use for car expenses is 35%. The taxpayer can choose to take into account, when allocating to the different business divisions, either the entire VAT amount shown on the purchase invoice or only the VAT amount remaining after applying the 35 % deduction limitation. In contrast, the 35% deduction rate should not be reported as a special ratio in the periodic VAT return.

This is a welcome tolerance, as one would otherwise be required to gross up (invoice by invoice) the VAT in order to achieve correct reporting.

In addition, they also announce that private use figures are not to be reported. Mixed and partial taxpayers who make business assets or other goods (company car, cell phone, etc.) available free of charge to a manager, director or staff member are therefore not required to report the ratios relating to this free provision. This also applies to data relating to reception costs on which no VAT was deducted (such as restaurant costs, for example).

Flexibility for 2024

Given the impact of this new legislation, the minister asked his administration, for the year 2024, as part of any fiscal monitoring of its correct application, to adopt a lenient attitude in the event of an apparently inadvertent error by a VAT taxpayer.