As Belgium and the UK are both in the European Union VAT Area, there are complicated VAT rules affecting business carried out between the 2 countries. This post outlines the main issues as they apply to a small UK business.
The UK comprises England, Wales, Scotland, Northern Ireland, and (generally for VAT purposes) the Isle of Man but not the Channel Islands.
Due to its 3 official languages, Belgian VAT services may referre to as BTW (Belasting over de Toegevoegde Waarde), TVA (Taxe Sur la Valeur ajoutée) or MwSt (Mehrwertsteuer). This page will use TVA, as French is more spoken, but references to TVA on this page do not include French TVA which is a separate tax system.
The standard rate of Belgian VAT is 21%, but reduced rates of 12% or 6% may apply to some supplies
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Exporting goods to Belgium
Do I need to charge VAT? is a common query of a registered UK business.A VAT-registered UK business does not need to charge VAT on goods it is sending to Belgium, provided it keeps documentary proof of export. It must also obtain the Belgian customer’s TVA registration number and show it on the invoice (including the BE prefix). All Belgian VAT numbers are in the format of 10 numerals.
This is the actual movement of products which is important for VAT services, rather than the name or address of the invoice. An invoice to a Belgian customer when the goods are not leaving the UK will not normally be classed as an export, and UK VAT would be chargeable. However, goods being sent to Belgium on behalf of a UK customer without a Belgian VAT number are still subject to UK VAT at the usual rate (even if the customer is registered for VAT in the UK).
Also if VAT is not paid, the net value of the transaction also needs to be recorded in boxes 6 and 8, on the UK VAT return. It should also be included in the EC Sales List, and if the company is needed to make one, the Intrastat return.
The UK business is able to reclaim any UK VAT on the goods which it is exporting, subject to the normal rules about reclaiming input VAT.
If the Belgian customer is not registered for TVA, and the UK business is not registered for TVA, then UK VAT must charge. In this case, the transaction included in the UK VAT return box 1 and box 6 but not box 8. This is not included in the EC Sales List but handles Intrastat coverage. No VAT is chargeable on goods that would be zero-rated or exempt when supplied in the UK (for example, books, children’s clothing, and some food items).
All mandatory additional charges for freight, storage, packaging or distribution will be paid at the same rate of VAT as the rest of the goods in that shipment, either 0 per cent if all the requirements are met, or if not the normal UK rate applicable to such goods.
Regardless of whether or not VAT was paid on the sale, whether the UK company pays for VAT on the flat-rate plan, the value of the export must be included in the sales from which the flat rate VAT services are payable. It could mean the company would be better off not being on the Flat Rate System.
Every year the UK business should check whether its level of sales to unregistered customers in Belgium requires it to register for TVA under the distance selling rules. Broadly, these require a UK business to register for TVA, and then charge TVA instead of UK VAT, if its sales of goods to customers in Belgium who are not registered for TVA are over €35,000 in a calendar year. Any these transactions will then be beyond the control of UK VAT, but would still be reportable in UK VAT return boxes 6 and 8. They will not be included in the EC Sales List, but on Intrastat, they are liable to be registered. Overseas registration is also optional at lower levels of sales, but as rates of Belgian TVA are typically higher than the UK VAT equivalent, this is unlikely to be favourable.
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Importing goods from Belgium
A VAT-registered UK business importing goods from Belgium should give the Belgian supplier its UK VAT registration number (including the GB prefix) so that Belgian TVA does not get charged. If TVA is charged, the UK business cannot reclaim it on their UK VAT return or by a direct claim to the Belgian tax authorities. The best that the UK business can do in these circumstances is to confirm its VAT registration number to the Belgian supplier, then ask for a full credit note and for the goods to be re-invoiced without TVA.
When a UK VAT-registered business imports goods from Belgium from a Belgian TVA-registered business, the UK business should pay UK VAT on the import by including VAT in box 2 of its regular UK VAT return, at the appropriate UK VAT rate. It may then reclaim that same amount from HMRC by including it as input VAT in box 4 of the same VAT return, subject to the normal rules about recovering input tax. The reason for this apparently circular exercise is to avoid VAT distortions between buying goods in the UK and importing them from Belgium. The net import value will be included in US VAT return boxes 7 and 9. Imports are not listed on EC Sales Lists but are responsible for Intrastat coverage.
Unless the UK business pays for VAT on the Flat Rate System, it also needs to pay the full UK VAT rate (instead of the reduced Flat VAT rate) on imports by including them in box 2 as above. Like for other costs under the flat-rate system, there is a very limited opportunity to recover the VAT in box 4.
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Special VAT rules for the movement of goods
Different rules may apply in certain less-common situations:
Goods sent for testing;
Mobile phones and computer chips;
Installed or assembled goods;
Goods supplied on sale or return;
Supplies to privileged persons in other EC states;
Transfers of own goods between the UK and Belgium within the same legal entity;
Movements of goods for the process, repair, etc;
Temporary movement of goods;
Triangular business transactions.
Details can be found in VAT Notice 725.
VAT on services provided in or to Belgium
UK VAT may need to be charged on services performed in Belgium or to clients based in Belgium, depending on the type of service supplied. This is a complex area, and there are specific rules for the following VAT services:
Services relating to land or property
Services of the short-term hire of means of transport
Services involving physical performance and events. For example artistic, cultural, education and training, sporting, entertainment services, exhibitions, conferences, meetings
Supplies of admission to artistic, cultural, education and training, sporting, entertainment events, exhibitions, conferences and meetings and services related to admissions
Ancillary transport, valuation of/work on goods
Restaurant and catering services
Intermediary services (generally agencies or brokers working for a commission)
Training services supplied to overseas governments
Anything else undergoes a general statute. It covers copyright, royalty, patents, other intellectual property, ads, contractors, developers, attorneys, accountants, data processing, writing translation, computer engineering, software repair, web design, sound engineers and technicians, staff supply, banking, and insurance.
Under the general rule, VAT on overseas services will be subject to UK VAT. This means that UK VAT must be charged at the usual UK rate, either standard rate, reduced rate, zero-rated or exempt. The UK business will account for VAT in the usual way.
If the service under the general rule is being supplied to a business customer in Belgium, it will be within the scope of Belgian VAT (UK VAT is not charged). The customer does not need to be registered for TVA for the service to qualify as being for business purposes, but some evidence of the business purpose should be obtained.
Most services are then covered by the Belgian reverse-charge procedure. This means that the Belgian customer has the responsibility for dealing with most of the VAT issues. If not, the UK business may need to register for TVA, and then charge and account for it, according to Belgian tax law. This is beyond the scope of this post, but more detailed information can be found here.
If the reverse-charge applies, the UK business needs to:
Include an appropriate statement on the invoice, such as “This supply is subject to the reverse charge”
Include the net value of the service in box 6 of the UK VAT return
From January 2010, include the service on the EC Sales List
If the UK business accounts for VAT on the Flat Rate Scheme, it does not need to pay Flat Rate VAT on the value of services that are not subject to UK VAT due to them performed in Belgium or to a customer based in Belgium.
If the Belgian customer also has a branch or premises in the UK, it is necessary to look at the whole picture to decide which location is the most direct use of the service. This will represent commercial facts and can vary from the role of the contract. For example, if the customer has their headquarters in Brussels, and all invoices are sent there, but most contact is with their office in London, it is likely that the service will treat as supplied in the UK and subject to UK VAT.
Services relating to land or property include estate agency, conveyancing, architects, surveying, construction, property maintenance, and repair work, hotel accommodation (unless a tour operator), defined exhibition stands, and property management services. If the property is in the UK, the service is liable to UK VAT regardless of the status or location of the customer. If the property is in Belgium, the service is outside the scope of UK VAT regardless of the status or location of the customer. The service may be chargeable to Belgian VAT, and the business may need to register for TVA.
With all these services, it is important to look at the precise nature of the underlying service being provided. A business cannot turn one type of service into another by simply changing the description on the invoice.
The United Kingdom business is also entitled to recover any VAT on overseas services or UK VAT on expenses incurred in delivering a service that considered to be outside the United Kingdom so that the service would be taxable if it made in the United Kingdom and subject to standard VAT recover laws.
VAT on services received from a Belgian supplier
If a VAT-registered UK business receives a service from a Belgian supplier (whether registered for TVA or not), and the place of the service according to the above rules is in the UK, the UK business may need to reverse-charge that service. This is a simplification measure whereby the UK business accounts for UK VAT on the service as part of its regular VAT returns, to save the Belgian business from having to do so.
The UK company quickly puts it into practice to find out what the UK VAT will usually be on the fee for the service, and then to include it in box 1 of the VAT return. This can then regain the same amount by including it as input VAT in box 4 of the same return on VAT, according to the usual rules on input tax recovery. The net value of the service should include in boxes 6 and 7 of the same UK VAT return. Where the business can reclaim all its input VAT, there is no net cost in making the reverse-charge entries.
If the UK business accounts for VAT on the Flat Rate Scheme, it does not need to pay Flat Rate VAT on the value of the reverse-charged service or include it on its VAT return.
The reverse fee does not extend to services, such as certain financial or educational services. That is usually excluded or zero-rated in the UK.
If exceptionally, one of the following services charged to a UK business, but the service used and enjoyed outside the EC (for example, in Jersey), the reverse-charge does not need to apply in the UK. The services are:
Supplies of the letting on hire of goods (other than means of transport);
Radio and television broadcasting services; or
Electronically supplied services.
Reclaiming Belgian TVA
A VAT-registered UK business that buys goods (which are not for export) or services in Belgium may be able to reclaim any Belgian TVA paid, by using a special refund scheme. This is available to a UK business that is not registered in Belgium for TVA, which has no physical presence in Belgium and does not make any supplies there. The claim was made in French or Dutch using the specified form and sent to the appropriate tax office in Belgium together with original supporting invoices and a UK VAT66 certificate.
From January 2010, claims for refunds of Belgian VAT under this scheme will need to be made online.
The main contact office for information about reclaiming Belgian TVA is:
Centraal BTW-kantoor voor buitenlandse belasting-plichitgen
Zaveltoren – 25ste verdieping
Tel: +32-2 5525977 or 5525982
Fax: +32-2 5525542
Bureau Central de TVA pour assujettis étrangers
Tour Sablon – 25 eme étage
Rue Stevens, 7
Tel: +32-2 5525977 or 5525982
Fax: +32-2 552 5542
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