|VAT FLASH N°519|
Reverse Charge Mechanism in Belgium: How to Apply it ?
According to European legislation, where taxable supply of goods or services is carried out by a taxable person who is not established in the Member state in which VAT is due, the said Member state may provide that the person liable for the payment of VAT is the person to whom the goods or services are supplied (Art. 194 of the VAT Directive).
Member states shall lay down the conditions for implementing the reverse charge mechanism described above.
generalized reverse charge mechanism has been introduced in Belgium since 2002
and is applicable to all supplies of goods and services that are deemed to take
place in Belgium and performed by a taxable person not established in Belgium
(i.e. established in another EU Member state or outside the EU) to a customer:
this generalized reverse charge mechanism, the supplier does not have to charge
Belgian VAT but his customer will have to account for the Belgian VAT due.
However, the regime of generalized reverse charge will not be applicable if the customer is:
A French company purchases goods from a Belgian supplier and resells them to a German company having a Belgian VAT number (direct registration). The goods remain in Belgium. The French company must be registered for VAT purposes in Belgium and charge Belgian VAT to its German client. VAT incurred on the purchase can be recovered through a Belgian VAT return.
The model would be different if the German company was registered in Belgium with a VAT representative. The French company would then not be required to register for VAT purposes in Belgium and should issue an invoice without applying Belgian VAT to its German client. VAT incurred on the purchase would be recovered through the electronic procedure laid down by Directive 2008/9.
Belgian VAT authorities are very sensitive to the correct application of the reverse charge mechanism. In case of a VAT audit, they systematically refuse the refund of VAT erroneously charged to the customer and apply fines and late interest if the reverse charge mechanism has not been applied. Contrarily, the authorities will systematically request Belgian VAT, fines and late interest in case the reverse charge mechanism has been erroneously applied.