23.12.2024

Belgium: Update:The New ‘VAT Chain’ – Key Changes Starting 1 January 2025!

With the reform of the VAT chain, the legislator is introducing a series of new VAT compliance and procedural measures, which will have a significant impact on VAT taxpayers. The implementation was initially delayed by a year due to IT implementation issues, but a recent Royal Decree has confirmed that the new rules will now come into force on 1 January 2025 (except for certain elements, which will take effect on 1 February 2025). However, in a statement issued by the Federal Public Service (FOD) Finance, it was clarified that the implementation of the new system will occur gradually, starting in January 2025 until early 2026.

What will change?

The VAT chain reform is introducing the following changes within VAT legislation:

An extension of the filing and payment deadline for quarterly VAT filers from the 20th to the 25th day of the month following the reporting period. This applies to returns and intra-community sales listings that must be submitted starting from 1 January 2025 (i.e., for the first time for the declarations concerning the 4th quarter of 2024).
Abolishing the VAT current account and related special accounts that were created in the event of late or non-submission of VAT returns or the non-payment of VAT liabilities.
Introducing the ‘VAT Provision Account’, which will replace the VAT current account. This management tool is only used for VAT credits that are not immediately claimed. Taxpayers may either claim these credits through the Provision Account or use them to pay future VAT liabilities. Until 1 May 2025, the current account will remain accessible for checking balances. Starting from 1 May 2025, taxpayers will manage their balances through the Provision account. The current account will then be permanently inaccessible.
VAT taxpayers will also be able to settle their VAT liabilities under the reformed VAT chain by direct debit.
Due to the new VAT refund procedure, VAT taxpayers will only be able to request a refund of VAT credits arising from the relevant periodic VAT return (box 72), provided that certain conditions are met. If no refund is requested or granted, then the VAT credit will generally be recorded in the VAT Provision Account, provided the credit amounts to at least €2.50 and there are no grounds for withholding. It is important to note that the VAT authorities will first perform checks on the VAT credit to be recorded. For all periodic VAT returns submitted before 1 May 2025, VAT taxpayers can still request a VAT refund in the same way as under the current system by simply checking the refund request box in the return. Until 1 May 2025, taxpayers also have the option to request a refund of their balance at any time, even outside of the declaration. If the taxpayer does not request this refund, the entire balance on the current account will be transferred to the Provision account at the beginning of May 2025. After that, the refund can be requested at any time via MyMinfin.
The accelerated monthly VAT refund procedure will apply automatically to all monthly filers (no longer limited to new/starting businesses). There will no longer be a need to apply for a monthly VAT refund permit.
Starting from 1 January 2025, the refund of the VAT credit requested via the periodic VAT return will, for quarterly filers, be made no later than the end of the third month following the declaration period of the periodic VAT return. For monthly filers, this period will be shortened to the second month following the declaration period of the periodic VAT return. However, if the taxpayer requests a VAT refund (of at least €50) through the Provision account, the requested amount will be refunded within one month of the request. Please note, however, that the transfer of the VAT credit to the Provision account, following the submission of the VAT declaration, is also subject to a period of 3 or 2 months depending on the declaration period.
Introducing a substitute VAT return for ongoing non-submission of periodic VAT returns. This VAT return will be automatically generated after a period of 3 months following the reporting period. The VAT due will be based on the highest VAT amount due in Form 71 of the VAT returns of the past 12 months (with a minimum of €2,100).
Starting from 1 January 2025, the administrative penalties will be amended. For non-payment or late payment, a proportional penalty of 5%, 10%, or 15% will be imposed, depending on whether the declaration was submitted on time. In the period up to this change, the penalty has been fixed at 15% but only after a payment notice has been sent by the VAT authorities. For non-submission or late submission of the declaration, progressive non-proportional penalties will be imposed, depending on the number of previous infringements (€500 – €5.000 per declaration). We suspect that the VAT authorities will take a stricter approach after the legal amendment, as, until now, proportional or non-proportional penalties have not always been imposed.
The account numbers for VAT payments will be changed. Two separate account numbers will be used:
- There will be an account number for the regular payment of the VAT due.
- The other account number will be used once the Federal Public Service (FOD) Finance has an enforceable title or when a specific VAT debt needs to be paid.
The new account numbers may only be used from 1 May 2025. Until that date, the old account numbers will remain in effect. After 1 May 2025, payments made to the old account numbers will automatically be redirected to the correct new account number
Another important procedural change is the introduction of a statutory response deadline, which currently does not exist for VAT matters. This will be one month for VAT inquiries unless legitimate reasons can be presented. This deadline can be shortened to 10 days for a VAT refund audit or if the Treasury’s rights are at risk.
Corrections of material errors (e.g., unreported invoices, unjustified VAT deductions, or incorrect adjustments) in the VAT return can only be made by the end of the filing period (the 20^th or 25^th day of the following month) or in the next VAT return after the error is discovered. It will no longer be possible to resubmit a VAT return for previous periods. This change applies to VAT returns and intra-Community sales listings that must be submitted starting from 1 January 2025 (e., for the first time for the VAT declaration for December or the 4th quarter of 2024).

Attention points

It is currently unclear how the implementation of these measures will be handled from an IT perspective, whether starting on 1 January or 1 February 2025. In practice, the key changes will relate to the VAT refund procedure, either through the VAT return or the VAT Provision Account:

To ensure that VAT credits are refunded on time, it is advisable for taxpayers to request refunds of outstanding VAT credits according to the current procedure in the VAT return for November and December 2024 (for monthly filers) or the last quarter of 2024 VAT return (for quarterly filers).
Under the new rules, the VAT authorities will also carry out checks on the validity of VAT credits when recording them in the VAT Provision Account. Therefore, both the refund request and the entry in the VAT Provision Account may trigger an audit of VAT matters.

VAT taxpayers will also need to strictly comply with their compliance obligations. Even if a taxpayer is only required to file zero returns, timely submission remains important. Persistent non-submission could lead to an assessment of €2,100 in VAT per return for substitute returns, as well as proportional and non-proportional fines.

Finally, we have observed that the VAT procedure is becoming increasingly formalised, aligning more closely with the procedure for direct taxes. An extension of the response deadline will only be possible if legitimate reasons are presented. So, this requires strict monitoring of the administrative procedure concerning VAT.

Tiberghien’s VAT team is available to assist you with any (practical) questions regarding the reformed VAT chain.

This article was updated with the latest information on 02/12/2024

Sources:

Act of March 12, 2023, on the modernisation of the VAT chain and the collection of fiscal and non-fiscal debt claims within the FPS Finance, Belgian Official Gazette 23.03.2023;
Royal Decree of September 29, 2024, amending Royal Decrees Numbers 1, 2, 4, 41, 44, 46, 48, 50, and 51 regarding VAT regarding the modernisation of the VAT chain, Belgian Official Gazette 23.10.2024.
Notice of the FPS Finance ‘De vernieuwde btw-ketting’ (version dated 22nd of November 2024)

Source: Tiberghien - Lawyers

For further information please visit the following link: Tiberghien - Update: The New ‘VAT Chain’ – Key Changes Starting 1 January 2025!

Author

Loulou Geboers

Senior associate

Belgium

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