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Your contact person for this topic:
Thomas Hermie
Tax lawyer
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Contact:
- +32 11 29 47 01
- t.hermie@euregio.law
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Further publications on this topic:
- New VAT exemption for small businesses in Belgium and the EU from 2025
- Status of VAT modernization and e-invoicing
- VAT Belgium 2025: New VAT rules for businesses
- EU reaches agreement on new ViDA proposal to modernize the VAT system
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More on this topic:
- VAT
For foreign companies that provide services in Belgium, the principle of reverse charge applies. This means that no VAT is shown on invoices to commercial customers in Belgium, only the net amount. From 1 January 2023, every recipient of real estate work who submits a VAT return in Belgium will always have to pay Belgian VAT due to the reverse charge procedure, at least if the company providing the service is based in Belgium.
Until now, the reverse charge mechanism only applied to real estate work if the customer was either (i) a VAT-registered company established in Belgium that submits periodic VAT returns in Belgium, or (ii) a VAT-registered company not established in Belgium that is registered for VAT in Belgium and has appointed a fiscal representative.
Extension of the reverse charge mechanism for property work
The application of the reverse charge mechanism, if the supplier is established in Belgium (as defined in Art. 20 § 1 Royal Decree No. 1), will be extended from 1 January 2023 to the effect that the reverse charge mechanism must also be applied if the customer is a foreign company that has a VAT identification number in Belgium without a fiscal representative (i.e., has opted for so-called direct VAT registration), provided that the customer is liable for VAT and submits (or should submit) periodic VAT returns in Belgium. If this is not the case, VAT liability cannot be transferred to the recipient. The supplier must therefore be aware of his customer’s VAT liability.
Accordingly, if the reverse charge mechanism is applied from 1 January 2023, the supplier must always include the following note on the invoices:
Reverse charge. If the customer does not object to the invoice in writing within one month of receipt, it is assumed that he recognises that he is a taxable person who must submit periodic VAT returns. If this condition is not met, the customer is liable for the payment of taxes, interest and penalties due as a result of this condition.
If the customer does not dispute the invoice within one month of receipt, the supplying company is exempt from liability for paying VAT.
Exceptions to the reverse charge procedure
Please note that if the supplier is not established in Belgium, the current reverse charge mechanism (according to Art. 51 §2, 5° of the Belgian VAT Code) has not yet been adapted. In this case, it is therefore still necessary for the customer to be a „taxable person established in Belgium who submits periodic VAT returns“ or „a taxable person not established in Belgium who has arranged for the authorisation of a fiscal representative in Belgium.“
For a foreign entrepreneur who uses foreign subcontractors (as the main contractor), it is therefore still advantageous to appoint a fiscal representative in Belgium. In this way, the reverse charge mechanism can also be applied in the relationship between the foreign subcontractor and the foreign main contractor, and the subcontractor does not have to register for VAT purposes in Belgium, which also provides cash flow benefits for the main contractor.
Furthermore, the amended reverse charge procedure refers to „real estate works“. For the application of the present reverse charge provision, real estate works (pursuant to Art. 20 § 1 Royal Decree No. 1) are understood to mean only:
- Construction, conversion, completion, installation, repair, maintenance, cleaning and demolition of all or part of a naturally immovable good and any service involving the supply of a movable good and its connection to an immovable good so that the movable good becomes a naturally immovable good.
- The supply and attachment to a building of
- components or parts of a central heating or air conditioning installation;
- components or parts of the plumbing installation of a building (for sanitary or hygienic purposes connected to a water or sewage system);
- components or parts of an electrical installation of a building, with the exception of lighting equipment and lamps;
- components or parts of an electrical bell system, a fire alarm device, an anti-theft alarm device and a house telephone;
- storage cupboards, sinks, sink units and furniture with built-in sinks, washbasins and furniture with built-in sinks, extractor bonnets, fans and air fresheners fitted in a kitchen or bathroom;
- shutters, blinds and venetian blinds on the outside of the building;
- wall panelling or floor coverings in a building.
- the fixing, installation, repair, maintenance and cleaning of the above goods.
In the case of other services subject to special VAT localisation rules, such as Art. 21 § 3 of the Belgian VAT Code, Art. 47 of the VAT Directive 2006/112/EC, or Implementing Decree No. 1042/2013, which must be considered as taking place in Belgium for VAT purposes because of their direct link to land or real estate located in Belgium, but which are not listed in Art. 20 § 1 of Royal Decree No. 1 (for example, drawing up plans for all or part of a building, mediating a sale, or providing legal services related to the transfer of a property), or in the case of supplying a movable item with installation or assembly, where the item is neither listed above nor sufficiently incorporated into or attached to the property to be considered immovable after installation, the relaxed application of the reverse charge mechanism under Art. 20 § 1 of Royal Decree No. 1 does not apply.
Conclusion
In short, small details can make a big difference. As a service provider, you should therefore determine exactly whether your customer is liable for VAT and include the relevant information on your invoices.
Do you need to talk to us?
If you have any questions about VAT in Belgium, please contact Thomas Hermie. Thomas Hermie is a specialist lawyer for Belgian tax law and specialises in advising foreign companies in Belgium.
