Compliance Services

Belgium’s e-invoicing and e-reporting plans formed part of wider tax reforms in the country, which included a potential VAT rate consolidation.  

Belgium’s planned wider tax reforms have, as of late collapsed, in part due to a degree of political instability in the country. This means that the envisaged plans to consolidate the reduced and super-reduced rates into a single 9% VAT rate have, for now, also halted.  

This in turn raises further questions about the timeline around Belgium’s B2B e-invoicing and e-reporting mandate. While the Belgian government has not communicated any official timelines, this potentially also places the July 2024 inception date in some doubt. 

Belgian is a critical and compliant market for Kofax. We are closely following the mandate implementation, with a view to categorically confirming when we can expect e-invoicing and e-reporting to commence in the country. 

The Belgian Federal Government (FOD Finance) wants to facilitate data exchange between taxpayers and the FOD Finance via the use of Application Programming Interfaces (APIs). API connections hold obvious advantages: they reduce the frequency of logins, clicks and actions when navigating file management. Specifically, with reference to the FOD Finance, the benefits extend to: 

• Consulting documents from the FOD Finance directly from an accountancy software package  
• Submitting periodic VAT returns.  

For enablement, software package developers must link the FOD Finance APIs to their own software packages. 

Further information on the APIs can be located via the following website: 

https://financien.belgium.be/nl/E-services/apis-fod-financien  

In accordance with the initial schedule, mandatory B2G obligations in Belgium were intended to pre-date the upcoming B2B obligations. However, delays to the B2G implementation schedule means B2G obligations may ‘collide’ or at least come relatively close to B2B obligations in the country.  

Draft legislation suggests that the obligation for economic operators to send their invoices electronically for public contracts with an estimated value of less than EUR 30.000 will only now be effective from 1 March 2024.  

This obligation to send invoices electronically in the context of public contracts does not apply to public contracts whose estimated value is less than or equal to EUR 3.000. However, contractual clauses can make this a more definitive requirement.  

Additionally, from 1 March 2024, the federal contracting authorities will also impose electronic invoicing below EUR 3.000. 

The Belgium Council of State will now consider the draft. 

The official publication is available on the following website and provides further information:  

https://news.belgium.be/nl/wijzigingen-inzake-de-borgtocht-en-de-elektronische-facturering-van-overheidsopdrachten 

You can also read more about Belgium’s B2B e-invoicing and e-reporting mandate via our dedicated country-specific page here. 

The acceleration of the B2B e-invoicing and e-reporting mandate in Belgian is not surprising: as discovered in a recent study performed by the International Monetary Fund (IMF), the Belgian tax authorities fail to collect approximately one fifth of the VAT due on products and services. The figures published represent a slight improvement from the pandemic period, but remain high, especially when compared with neighboring countries.  

The study will dictate the trajectory to further reduce the VAT gap in Belgium. Other initiatives, aside from the mandate, include the modernisation of the VAT gap and cash registers.   

 The IMF report can be accessed via the following link:  

https://www.imf.org/en/Publications/CR/Issues/2023/05/17/Belgium-Technical-Assistance-Report-Revenue-Administration-Gap-Analysis-ProgramThe-Value-533507?cid=em-COM-123-46566  

 Belgium is a compliant territory for Kofax and we intend to support the upcoming e-invoicing and e-reporting mandate. You can read further information about this here.  

Last month’s post revealed some significant updates in respect of Belgium’s B2B proposed e-invoicing trajectory. The Belgian Minister of Finance has re-affirmed in response to a Parliamentary question that in accordance with the government agreement, he intends to mandate e-invoicing for most taxpayers.  

This inevitably requires an application for derogation from Articles 218 and 232 of the EU VAT Directive, which has been discussed between the Cabinet of the Ministry of Finance and the European Commission.  

The measures regarding both e-invoicing and e-reporting are in line with the proposal from the European Commission and are hoped to further reduce the VAT gap in the country. 

Belgium’s fiscal trajectory for 2023 and 2024 is shaping up to be a busy one. 

Our recent post on the VAT reduction for energy in Belgium indicated that the reduced rate of 6% for energy (down from 21%) was a temporary one. However, the Belgian Federal Budget has reversed this, stating that this VAT reduction will in fact be a permanent one, benefitting Belgians with more affordable energy prices. The VAT rate will be effective from 1 April 2023. 

Belgium is a compliant territory for Tungsten and we support all valid VAT rates in the country as part of our e-invoicing solution.  

Last month, we published some significant updates in relation to Belgium’s intent to mandate B2B e-invoicing in the country. You can read more in respect of the same here.  

Belgium’s outreach in respect of the digitisation of its fiscal procedures has extended yet further beyond the e-invoicing topography as it looks to simplify and streamline its fiscal infrastructure on a much more extensive scale. The proposed Bill No. 55K3128001 includes the procedures which, once facilitated, aim to achieve this underlying objective. 

A particularly significant change proposed by the bill is the introduction of automated processing of periodic VAT declarations and payments. 

The Bill is currently with the Belgian Parliament for approval, and is expected to come into effect, if approved, on 1 January 2024. This aligns with proposed e-invoicing and e-reporting transitions in Belgium, hinting at prevalent fiscal change in the country in 2024. 

Persistent rumours ran abated in the e-invoicing realm relating to Belgium’s intention to accelerate e-invoicing in the country. We have now been provided with more concrete details about Belgium’s intention to mandate e-invoicing in the country.  

The Belgian Minister of Finance has unveiled more definitive timeframes with regards to anticipated e-invoicing in Belgium.   

The proposed plans point to a hybrid solution including e-invoicing and e-reporting specifically- the latter only just making an appearance in Belgium’s proposed tax reforms. This is likely influenced to a considerable extent by the VAT in the Digital Age (ViDA) proposal, which sets out mandatory cross-border reporting from January 2028 for all EU Member States. You can read more about the proposal here.   

E-invoicing implementation in Belgium is likely to be phased, in line with the following:   

• 1 January 2024: all large companies are obligated to receive structured invoices   
• 1 July 2024: e-invoicing will be mandated for taxpayers with an annual turnover of over 9,000,000 Euros   
• 1 January 2025: taxpayers with an annual turnover of between 700,000 and 9,000,000 Euros will be subject to the new e-invoicing obligations  
• Other taxpayers will comply at a later unknown date.   

The proposed e-invoicing and e-reporting solution comes as part of wider proposed tax reforms in Belgium, which is also recommending the following VAT rate changes:  

• A new 9% rate  
• The broadened application of the 0% VAT rate  

• This would include ‘essential’ items such as fruits, vegetables, medication, diapers, specific hygiene products, and public transportation  

• The abolishment of the 12% rate  

• The existing reduced rates of 6% and 12% would be combined into a new reduced rate of 9%. Coal, considered a major pollutant, would be subject to the standard rate of 21%  

• The reduction in scope of the reduced 6% VAT rate  

• The reduced rate of 6% would remain for certain basic utilities like electricity, natural gas, heating, and tap water  

• More specifically: the VAT rates for demolition and reconstruction specifically are proposed to permanently be set at the new 9% rate, rather than 6%.  

Through suggesting revised VAT rates, Belgium is following in the footsteps of its European counterparts, Switzerland, The Czech Republic and Norway, who are similarly either implementing or contemplating an overhaul of their VAT rates.   

While these changes are substantial, it is important to note that the proposals, including timeframes, are yet in draft form only. Furthermore, the timeframes outlined relate to the e-invoicing element only of the proposal; e-reporting timeframes are yet to be defined.   

Belgium is a compliant territory for Tungsten Network, and we are cognizant of the fact that the anticipated timeframes- commencing on 1 January 2024 for specific companies- are impending.   

Tungsten is closely following developments in Belgium with a firm view as to how we can best support our Belgian market considering any e-invoicing and e-reporting advances.   

In transitioning to a post-covid era, multiple countries are reviewing previously enacted fiscal measures to see whether they are still pertinent today. An integral component of the post-covid recovery is the reinstating of VAT rates imposed prior to the pandemic.  

As Covid, or at least its impact, sharply declines globally, several countries are fully reversing fiscal measures ratified during the pandemic. Belgium’s reduced 6% VAT rate for masks, a direct response to the Covid pandemic, expired on 31 December 2022, and the VAT rate for masks will return to their former rate from 1 January 2023, in line with reduced demand.  

Multiple countries use the reverse charge to reduce tax evasion and consequently reduce VAT gaps. The reverse charge mechanism operates by shifting the burden of paying VAT to the buyer rather than the supplier. This prevents the supplier from charging the VAT element but not paying VAT directly to the tax authorities. As a result, the reverse charge today is viewed as an effective measure by multiple EU Member States to regulate the flow of VAT to tax authorities.  

Belgium has now extended the reverse charge mechanism to also cover the construction and public works sector and in doing so has widened the scope of services subject to fiscal policies that seek to control tax evasion.