Tax Insights | December 2022 | VAT Reverse charge for immovable work: changes as from 2023

As from the 1st of January 2023 the application of the reverse charge mechanism in case of immovable work will be applicable as soon as the customer is filing periodical VAT returns.

VAT reverse charge mechanism

The application of a reverse charge mechanism implies that the supplier will issue an invoice without VAT to the customer. The customer is liable to pay (“self-account”) for the VAT due via its periodical VAT return and can immediately deduct this VAT in the same VAT return provided that the conditions are met.

Current rules

To date, VAT due on immovable work which takes place in Belgium will be subject to the local reverse charge of article 20 of the Royal Decree no. 1 if the following conditions are met: 

  • the supplier is a taxable person, established in Belgium, and
  • the customer is a taxable person, either established in Belgium and filing periodical VAT returns, or, not established in Belgium but registered for VAT purposes via an individual VAT representative.

This implies that this reverse charge mechanism is not applicable in case the foreign customer is registered via a direct VAT registration (practical difficulties to verify this).
Note that if the supplier is not established in Belgium, the reverse charge mechanism of article 51, § 2, 5° of the Belgian VAT Code applies, with the same conditions in the hands of the customer as mentioned above.

Changes per 1 January 2023

Going forward, the Belgian suppliers should add the following on the invoices issued regarding immovable work, located in Belgium, when applying the reverse charge mechanism.

Reverse charge. In the absence of a written objection within a period of one month from receipt of the invoice, the customer shall be deemed to acknowledge that he is a taxable person required to submit periodical VAT returns. If that condition is not met, the customer shall be liable with respect to that condition for the payment of tax, interest and fines due. Unless there is collusion between the parties, the service provider is released from liability in respect of the condition referred to in the first paragraph concerning the capacity of the customer if the customer does not dispute the invoice in writing.”

This provision should avoid that the supplier applies the reverse charge mechanism upon receipt of the Belgian VAT number of the customer, without having the certainty that this customer is liable to file Belgian periodical VAT returns.
In addition, the reverse charge mechanism for immovable work applies as soon as the customer files periodical VAT returns, regardless its VAT registration (i.e., having a “direct VAT registration” or not). 
For the avoidance of doubt: to date the equivalent article 51, § 2, 5° for non-established entities has not (yet) been changed.

 

If you have any questions or want some help regarding the above, please do not hesitate to contact us at: [email protected]

RSM Belgium | Tax

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