The « VAT invoicing » Directive of 13/07/2010 was implemented in Belgium as well as in all Member States on 01/01/2013. The principal changes are described hereinafter.
1. Competent Country for Issuance of Invoices
As a general rule, the invoice shall be issued in accordance with invoicing regulations of the country where the operation is located from a VAT perspective. Therefore, this country lays down the rules regarding mandatory mentions and deadlines for invoicing.
Nevertheless, the European Union country where the supplier/provider is established will determine invoicing rules in two situations:
- The supplier/provider is not established in the EU country where the operation is located and VAT is self-assessed by the recipient;
- The operation is located outside the EU.
A German company is performing the following operations in/from Belgium:
- Local delivery with reverse charge mechanism [Art. 194 of VAT Directive] => the invoice shall be issued according to German regulations [country of the supplier – derogation];
- Local delivery with Belgian VAT, intra-Community delivery and exportation outside the EU =>the invoice shall be issued according to Belgian regulations [country of the operation – general rule].
2. New Mentions on Invoices
The new mentions to include on invoices are the following:
- When VAT is due by the co-contractor => mention “Reverse charge“.
A German company sells goods which are located in its stock in Belgium to a Belgian firm. It is an operation for which the person liable for payment of the tax is the Belgian client in accordance with Art. 194 of VAT Directive. From now on, the German company must indicate “Reverse charge” on its invoice.
- When the operation is exempted => mention of the relevant VAT Directive or VAT Code provision under which the operation is exempted from the tax or any other mention indicating that the operation is exempted.
A British company exports goods located in Belgium outside EU territory. It is an operation exempted from VAT in Belgium since requirements are met. The British company must continue to refer, as previously done, to the relevant provision justifying the exemption on its invoice [e.g. Exportation – Article 146 of the VAT Directive].
3. VAT Liability
Belgian State has taken advantage of the implementation of the « VAT Invoicing » Directive to review its VAT point regime. Before, VAT was due at the time of delivery or when service supply was completed [main cause of chargeability], except when the invoice was issued or the money partially or totally received before that moment [subsidiary causes of chargeability]. As from 01/01/2013, only a down payment is still considered as a subsidiary cause [except for intra-Community deliveries of goods]. In other words, an advance invoice does not make any longer the client liable for the payment of VAT.
An Austrian company is carrying out a construction project in Belgium for € 1.000.000 on behalf of a German company and requires a € 300.000 advanced payment when executing the contract. The payment shall be requested through another document than an invoice and the document shall not mention VAT, or VAT rate, or the reason why VAT is not charged [no mention regarding the person liable for VAT or the exemption and no reference such as “including VAT”]. The Austrian company will have to issue its invoice only when receiving the payment of the deposit. The German company will be able to deduct VAT exclusively from that moment.
Let us point out that cash accounting scheme in Belgium is only valid for retail sector i.e. transactions with individuals [as opposed to some other Member States]. A transitional regime has also been introduced in 2013 but only for internal operations.
A German company sells goods from Belgium to a British company [intra-Community delivery of goods] and requests a advanced payment. No invoice can be issued to claim the payment of the deposit or when receiving it. The German company will be able to issue its invoice only at the time of delivery [and will have to report it in its intra-Community listing solely at that moment] and until day 15 of next month.
The implementation of all these new rules has a significant impact on the day-to-day management of VAT obligations of foreign companies in Belgium. It is in their best interests to thoroughly review their European VAT model [country competent for invoicing, mandatory mentions to be reported on invoices, deposit, deduction, etc.] in order to adjust it and, where necessary, take into account local specificities.