Keep in mind
Foreign companies that have to appoint a fiscal representative in Belgium are obliged to deposit a bank guarantee with the Belgian Treasury to cover any VAT debts. This article describes how to determine the amount of this bank guarantee.
What is a fiscal representative?
Your company may be required to be issued a VAT number in Belgium. This registration is done either directly or through a so-called fiscal representative.
The fiscal representative is a Belgian company that will fulfil all the VAT obligations in Belgium for you: it will take care of the VAT registration file, keep the VAT accounts, sign and file the VAT returns, the various statements, tend to tax audits, etc. It is the fiscal representative that is legally responsible for the VAT registration in Belgium. He is legally responsible for the payment of VAT you owe to the Belgian Treasury.
Why is a bank guarantee required?
In order to avoid bad payers, the Belgian administration requires the deposit of a bank guarantee to the tax representative to cover any VAT debts.
With this system of securities provided for by the Belgian VAT regulations, your company can very quickly find itself with a large sum of money blocked for many years, which may ultimately make it hesitate as to whether it is worthwhile to go through Belgium.
Especially since neighbouring countries such as France, the Netherlands or Germany do not systematically require such a guarantee to be issued.
How is the guarantee calculated?
Belgium, with a barely hidden competitive objective, has therefore decided to soften its method of calculating the bank guarantee since October 1st, 2021.
There are three important elements to remember:
- Previously, the amount of this guarantee was, in principle, up to 25% of the VAT theoretically due on an annual basis. From now on, the calculation method is 10% of the VAT actually due, again on an annual basis. In addition to this notable arithmetical reduction, it is the distinction between theory and reality that should be highlighted. Indeed, the latter has concrete implications that can be immediately very advantageous.
- As for the amount of the guarantee, it is now specified that a maximum threshold of EUR 1,000,000 is set (the minimum threshold of EUR 7,500 being maintained). Again, this ceiling represents a favourable adjustment overall.
- Finally, the revisions that can be made to this guarantee will apparently be put into practice more.
Reducing your guarantee to the bare minimum? it is possible
Although these changes in the way guarantees are calculated may seem negative at first glance, many B2B companies will be able to benefit from them, with a nice cash flow boost in the end.
So it is not necessarily all bad news in Belgium. You just have to know how to calculate.