The Author of the Article
What Topics are Covered in this Article?
This article is about the new VAT reporting obligation for non-profit organizations in Belgium as from 1st January 2024:
- Non-profit organizations can have different VAT status depending on their activities: ordinary, mixed, partial, exempt or non-taxable. Each status has a different impact on the VAT deduction right of the organization.
- The new reporting obligation applies to mixed and partial taxpayers who have to provide information on their method for calculating their VAT deduction percentage.
- The deadline for providing the information is 22th April 2024.
- The article also suggests some steps for associations to review and optimize their VAT status and deduction method.
Multiform VAT status for Non-profit organization
Non-profit organizations (ASBL, AiSBL, etc.) do not enjoy a specific status as far as VAT is concerned (contrary to income tax). In principle their activities are subject to VAT (general principle of taxation). Therefore, they must register for VAT purposes and are subsequently entitled to deduct the VAT levied on the costs relating to their activities.
However, there are two exceptions to this general principle of taxation: activities VAT exempted (e.g. lobbying activities) and activities that fall outside scope of VAT.
The exact qualification of the association's activities is used to determine its VAT status : ordinary, mixed, partial, exempt or non-taxable and therefore the extent of its deduction right, i.e. the VAT percentage the organization can deduct on the costs incurred for its activities.
New VAT reporting obligation as from 1/1/2024
Associations with partial right of deduction must provide information to the Tax Authorities concerning their method for calculating their VAT deduction:
- The general proportion of the previous calendar year;
- The proportion of input VAT on the total input VAT of the previous year, quoted in %, that has been recovered:
- totally;
- at 0%;
- in accordance with another allocation key.
- The allocation key(s) that have bee used to determine the deductible input VAT.
As a result of a new regulation (RD dated of 21/12/2023), the new reporting obligation is not only applicable to mixed taxpayer but also to partial taxpayers as from 1/1/2024.
The VAT expert's eye
We strongly suggest all associations to take the following steps:
- Review their revenues to determine the VAT status (ordinary, mixed, partial, exempt or non-taxable) and therefore the extent of its deduction of input VAT
- Optimize the method for calculating their VAT deduction percentage
- Provide the information to the Tax Authorities within the legal deadline: 22th April 2024 at the latest.
Failure to comply with this new VAT reporting requirement in due time could generate litigation about the VAT deduction percentage.
Why you should contact our tax consultancy for your non-profit organization ?
As a non-profit organization, you may think that you are exempt from VAT or that you do not need to worry about it. This is not the case. Depending on the nature of your activities, you may be subject to VAT or have a partial right to deduct. This can have a significant impact on your costs and cash flow.
In addition, from 1 January 2024 there will be a new VAT reporting requirement for non-profit organizations with a partial right of deduction. You will need to provide the tax authorities with information on your method of calculating your VAT deduction percentage. This can be a complex and time-consuming task, especially if you are not familiar with the VAT rules and regulations. But don't look at this information as a new mental burden for your accounting department. Look at it as an opportunity to reclaim even more VAT.
This is why you should contact our tax consultancy for your not-for-profit organization. We are experts in European VAT and can help you with :
- Checking your VAT status and determining the extent of your right to deduct
- Optimizing your method of calculating your VAT deduction percentage
- Provide information to the tax authorities within the legal deadlines
- Avoid penalties or disputes relating to your VAT obligations
We offer a free video conference to assess your situation and provide you with a tailored solution. We look forward to hearing from you soon.