PARTNER, MAZARS IN BELGIUM
“By the beginning of 2019 new companies will have to be compliant with the reformed Belgian Companies’ Code”.
“Regarding Brexit, besides the implications for the supply of goods, one should examine the impact on the reporting of incoming and outgoing services as well as the possibility to use the MOSS regime for digitally supplied services by a UK company in Belgium (and vice versa).”
1. What are the three main tips you give to foreign companies coming to Belgium? Specifically, small- to mid- sized companies?
Make a thought-through decision with regards to the appropriate company form taking into account the future reform of the Belgium Companies’ Code
The Belgian Companies’ Code is subjected to the most drastic reform since 1999. The amount of company forms is being reduced from 13 to 6. The remaining company forms will be subjected to significant changes, in particular the B.V. (private limited liability company). This company form will become a more flexible form with multiple new options regarding shareholders’ rights and organisational features. The exact date of the entering into effect of this law is not final yet, but esti- mations are that by the beginning of 2019 new compa- nies will have to be compliant with the reformed Belgian Companies’ Code. Our advice would be to make sure you get expert advice in order to make the right choice.
Enhance consumers’ trust by ensuring compliance with local consumer protection laws which mainly enforce transparency and fair advertising.
Since purchases are being executed without personal interaction, the consumers’ trust is key. The most effective way to gain consumers’ trust is to be transparent. Local consumer protection laws impose a multitude of rules regarding transparency towards consumers. Customers have to be well informed about amongst others, the vendor, the prices and characteristics of products and the rights of the consumers in an ecommerce transaction. Most of this information will be incorporated in the general terms and conditions (GT&C), a document of indispensable value. It is very important that the GT&C contain all legally obliged information and that they are written in a language which is easily comprehensible for the consumer. Taking into account the multitude of official languages in Belgium (Dutch, French and German), this often implies that they have to be drafted in several languages. Our experience teaches us that it is often the company which turns out to be the victim of poorly drafted GT&C. A review by a legal expert is in our opinion essential.
Furthermore, Belgian consumer protection laws impose rules on online advertising which should at all times be respected. Of course, direct marketing practices require a GDPR compliant permission of the customer. A compliancy check with the local rules regarding online advertising is an absolute must before targeting Belgian consumers through online marketing.
Secure customer data and inform customers on personal data processing
Our last tip is not strictly related to the Belgian territory. Since May 25th, the GDPR launch date the general awareness regarding data processing and appropriate data protection is on the radar of every business within the EU.
The most important obligations for SME’s are:
Firstly, to create a data register stipulating the different data processing flows within your business;
Second of all to review the agreements entered into with data processors, your suppliers, your customers and other contracting parties in order to make them GDPR-compliant;
Another key obligation is to provide for appropriate security of customer data in order to avoid data breaches;
The exact implications of certain GDPR obligations will only become clear over time and certain aspects have to be defined on a national level. Therefore, the guidelines of the Belgian data protection authority will have to be consulted as well.
2. What are VAT-specific rules for e-commerce platforms in Belgium?
Whenever a foreign company sells goods to private individuals in Belgium, the foreign company will be more than likely compelled to register for Belgian VAT purposes. The registration becomes compulsory if the seller of the goods sells (and ships) goods to Belgian individuals for more than 35.000 EUR (VAT excluded) a year (the threshold does not apply for excise products). In case of an EU-based company, the registration can be done via a direct VAT registration. Should the seller of the goods be a non-EU based company, it will be compelled to appoint an individual fiscal representative. In both cases, the foreign company can also choose to voluntarily register for Belgian VAT purposes, even if the threshold has not been exceeded yet.
Belgian VAT (reduced rates or standard rate of 21% depending on the nature of the goods) will have to be charged and collected by the foreign company on the sales invoices. The VAT will have to be settled to the Belgian VAT authorities via periodical VAT returns in Belgium (monthly or quarterly, depending on the annual turnover). The foreign company will have to issue VAT compliant sales invoices, mentioning the Belgian VAT number and Belgian VAT amount due. Belgian input VAT can be reclaimed via the Belgian VAT return as long as the input VAT has been correctly charged by the supplier and as long as there are no deductibility restrictions in Belgium (car costs, accommodation expenses, ...).
In case a Belgian company sells (and ships) goods via its e-platform to foreign private individuals, outside Belgium, it will have to comply with the local VAT requirements of the country where the client is located. In this respect, it has to be noted that different thresholds may apply, and other formalities could be complied with.
3. Are foreign companies eligible to a refund for Belgian VAT? If so, what does obtaining the refund entail? If not, how can foreign companies become eligible?
Foreign companies are eligible for refund of Belgian VAT. The procedure to apply for a refund in Belgium can be summarized as follows:
- The foreign company, without establishment in Belgium, is registered for Belgian VAT purposes.
The refund of input VAT can be done via the Belgian VAT returns, which have to be filed in Belgium on a monthly or quarterly basis. Whenever the input VAT results in a VAT credit (because it is higher than the VAT payable), a refund can be requested every quarter by checking the box of the Belgian VAT return. In principle, the VAT is then reimbursed within a period of 3 months. In Belgium, the following restrictions apply on deduction of input VAT:
• Alcoholic beverages (not meant for resale or production),
• Accommodation, beverages and meals (unless incurred by a staff member while performing a taxable supply outside the company’s premises or in case or a recharge ‘as such’),
• Motor vehicle costs: maximum 50% (in function of the professional use).
- The foreign company is not registered in Belgium, nor has to be registered in Belgium, and is based in a Member State of the European Union
The request for Belgian VAT refund has to be done electronically in the Member State of establishment via the VAT refund procedure as foreseen by the 8th VAT Directive. The request has to be made before September 30 of the following calendar year.
The request has to be made for a period of minimum 3 months and maximum one year. Depending on the period, the foreign company has to respect the minimum amount of refund (400 EUR or 50 EUR). Depending on the nature and the taxable amount of the incurred expenses, copies of the invoices has to be submitted as well to the request. There is no need for a Belgian bank account number.
The same deductibility restrictions apply as for VAT registered foreign companies (see above).
- The foreign company is not registered in Belgium, nor has the obligation to do so, and is based outside the European Union
The request for Belgian VAT refund has to be done electronically on paper forms in Belgium via the VAT refund procedure as foreseen by the 13th VAT Directive. The request has to be made before September 30 of the following calendar year. The Belgian law does not foresee in any “reciprocity rule” implying that each third country may apply for a VAT refund in Belgium.
The original signed forms (in Dutch, French or German) have to be submitted at the Belgian tax office, and have to be filed together with (amongst others):
• Signed proxy;
• Original invoices + overview of the invoices;
• Certificate of VAT status in the country of residence.
The request has to be made for a period of minimum 3 months and maximum one year. Depending on the period, the foreign company has to respect the mini- mum amount of refund (200 EUR or 25 EUR). There is no need for a Belgian bank account number.
The same deductibility restrictions apply as for VAT registered foreign companies (see above).
4. When looking at indirect taxation, how best could Belgian businesses map and assess the possible VAT and admin costs of the Brexit?
If we are talking about a “hard” Brexit, implying that after the legal Brexit, The United Kingdom will no longer be a part of the customs Union nor from the VAT Union, this will have the following major consequences, from an indirect tax point of view:
Intracommunity acquisitions of goods will be treated
as import of goods, generating import VAT and excise
and/or custom duties;
Intracommunity supplies of goods will be treated as
export of goods.
These changes could have important consequences with respect to cash flow (import VAT due on importations; custom and excise duties) and with respect to administrative formalities (custom formalities, export controls, ...).
In order to fully prepare Belgian businesses, dealing with UK suppliers and/or clients, an impact assessment has to be done in which following items are covered:
Review and amendment of the financial reporting systems;
Review of the existing flow of goods and invoices in order to consider the impact of import VAT and custom duties (VAT deferment regime possible, timing of actual reimbursement, custom tariffs, ...);
Examination of the current custom procedures, applicable for import of export of goods.
Besides the implications for the supply of goods, one should examine the impact on the reporting of incoming and outgoing services as well as the possibility to use the MOSS regime for digitally supplied services by a UK company in Belgium (and vice versa).