In response to the Corona crisis, the Belgian federal government has taken some new fiscal measures in order to support and promote solidarity. These new measures relate to both VAT and income tax, and remain in force until 30 June 2020. In the meantime, a Circular Letter regarding these measures has already been published by the tax authorities.
Businesses donating inventories of medical (relief) supplies to hospitals, can deduct the input VAT paid on these medical supplies and do not have to perform a VAT revision on the moment of donation.
This supporting measure is an excpetion to the general VAT principle: being that input VAT deduction is only allowed insofar the purchases are made in view of performing a taxable activity. When goods are given away for free, this is generally considered as a supply of goods on which VAT is due. Consequently when goods are given away for free, the supplier normally has to pay VAT on these free goods. Currently there are already some exceptions to this rule (i.e. for supplies of commercial samples or commercial gifts of limited value, and certain goods supplied to charity), now a new excpetion is added.
Aforementioned implies that donators keep their input VAT deduction right and do not have to perform a VAT revision for:
- Medical relief supplies (with exception of medicines);
- Protection equipment for healthcare providers and patients.
In order to benefit from this support measure it is required that the beneficiary (hospital) signs a form in which they declare to have received a certain number of supplies for free.
Furthermore, the Belgian federal government has decided that the costs incurred by businesses for the production of medical supplies are qualified as business expenses. The donations will not be considered as taxable attributed abnormal or gratuitos advantages. In that way these businesses are not fiscally penalised for their solidarity.
Finally, attention is drawn to the existing tax relief scheme that applies to donations in cash of at least 40 EUR to hospitals.
If you would like to receive additional information on this matter, the tax team of RSM Belgium is at your disposal : [email protected]