The long-expected circular on the 'white cash register' has been published

Since June 2016, the legislator has decided that when a VAT-payer realises annual turnover (excl. VAT) of over 25,000 EUR from restaurant and catering services, without taking account of the turnover from drinks, it must work with a registered cash register system (hereafter 'GKS'). It must then issue GKS cash register receipts in relation to the provision of meals and drinks (i.e. also for pure supplies of meals or for just serving drinks without meals). This regulation, however, not only applies to the operator of a restaurant, inn or café or the usual domestic caterer, but to all tax-payers who offer restaurant and catering services in their establishments (e.g. spa complex, adventure park, football stadium, company restaurant, baker with café, mobile chip van, etc.) The threshold of 25,000 EUR must be assessed per operated establishment, even if the establishments operate under the same VAT number (e.g. operator of an ice cream parlour also has an ice cream van, or various catering outlets within one adventure park, or a butcher who also provides catering services).  

For some time, the administration has been working on an administrative circular that would clarify how this legal obligation must be interpreted. This circular was finally issued on 6 November 2017 (Circular 2017/C/710 on the registered cash register system) and came into force on 1 December 2017. Below, we would like to provide further information on the main regulations within this extensive circular. 

Distinction between 'supply of food and drinks' and 'restaurant and catering services'

In order to set the threshold of 25,000 EUR, and to figure out whether the GKS system must be applied, account is only taken of the turnover (excluding VAT) that is realised from 'restaurant and catering services' (except drinks) that are provided by the tax-payer (note that the hire price for tables, chairs, signs, etc., whereby no separate price is charged, will be included alongside the meals). The administration must therefore clarify what they consider to be 'restaurant and catering services'. Attempts have been made in the past, however, in the opinion of the administration, these could have led to undesirable effects (including disruption to competition, legal abuse) and practical problems. As a result, the VAT administration has taken a new administrative standpoint in this circular, which supersedes previous, corresponding standpoints.  

Firstly, the VAT administration distinguishes between a restaurant service and a catering service:

• Restaurant service: the provision of food and drinks to consumers in the indoor or outdoor space of the tax-payer (permanent, temporary or mobile set-up, surface or building), equipped with the necessary infrastructure for consumption at that location. This does not include multifunctional facilities. These are permanent infrastructures that are not linked with a specific temporary event, that is entirely separate to the sales of food and drinks and which may be used by all (e.g. a waiting room at a station or cinema, public bench, etc.) restaurants, brasserie, company canteen, fast-food restaurant, tea room, cafeteria, food truck, dining area, temporary eating stand at a festival of market, …
• Catering service:the provision of food and drinks to a client at a location other than the tax-payer's space that is determined by the client. provision of food and drinks for a client at home by a domestic caterer, chef at home, chip van at home …  

1.Restaurant service

The clients consume the food and/or drinks in an indoor space

When a tax-payer provides his clients with a space indoors that is equipped with an infrastructure which offers the clients the opportunity to consume food and/or drinks, seated or standing (ordinary tables, upright tables or snack bar, with the exception of multifunctional facilities), at their location, this always constitutes a restaurant service if these clients make use of the infrastructure.  

The clients consume the food and/or drinks in the open air

In this case, there is only a restaurant service if, alongside the provision of one or multiple (upright) tables or folding counters intended for the consumption of food and/or drinks, one of the following service aspects are present and the clients make use of the available infrastructure in order to consume their purchased food and/or drinks:

• There is at least one additional infrastructure element that makes consumption at that location more pleasant (e.g. floor matting, patio heating, parasols, atmospheric music, lighting, tablecloths, closures, etc.);
• The tax-payer provides furniture so that the clients can be seated while enjoying their food and/or drinks;
• There is cutlery or tableware (disposable or reusable) available to be used at that location (e.g. forks, plates, serving trays, etc.);
• There is table service and/or the client does not have to clear their own items.  

Note that with respect to mobile food stalls or food trucks at an event relating to staged events (not food truck festivals) whereby the consumer pays the tax-paying operator of the stall or truck for their food and/or drinks directly, the VAT administration will accept that there is a case of the supply of goods if no consumption area is made available by the tax-payer or a third party (e.g. the organiser of the event). A hamburger stall at the market, in other words, will be treated differently to a hamburger stall at a festival. Whether the law will agree with this perspective or will identify a breach of the principle of equality in this context, must be demonstrated in the future.   

If the tax-payer has both an indoor and outdoor area, every process must be qualified separately on the basis of the above regulations. As a result of this viewpoint, from 1 December 2017, tax-payers will more readily be regarded as offering a restaurant service whereas previously they were regarded as simply supplying food and drinks. If, for example, a chip stall in the open air offers an eating counter and plastic forks, it is considered to be a restaurant service. The fact that it is a restaurant service is not only important for calculating the threshold regarding the application of GKS, but is also important in terms of:

• the relevant VAT rate (21%, 12% or 6%);
• determining the location of processes;
• deduction exceptions for restaurant costs (article 45, §3, 3° W. VAT).  

We are, in fact, already wondering how the VAT administration will control this in practice. How can they establish whether a chip stall, for example, on a particular day provided an additional service element but, on another day, did not? And how can the VAT administration check how many people actually consumed chips at the counter of the chip stall and how many ate theirs elsewhere? And who will bear the onus probandi? In our opinion, this could lead to disputes in the future, whereby it will be impossible to evaluate the reality (assessment via fixed sums?). One of our questions would be whether it is, perhaps, the intention of the VAT administration to implicitly force everyone into GKS.  

2. Catering service

Food supplied at a location other than in the space of the tax-payer and WITHOUT any human intervention with respect to the client

If the tax-payer is limited to providing the food and drinks without further human intervention with respect to the client, this constitutes a simple supply process. The fact that the food is supplied in hot-food containers, or any other activities that are necessary for 'processing' the food, makes no difference. If items are also made available (e.g. cutlery, furniture, decorations, etc.), this is a separate process (hire of items) that is subject to 21% VAT.  

Food supplied at a location other than in the space of the tax-payer and WITH human intervention with respect to the client

Once the tax-payer performs at least one additional human intervention with respect to the client, this will be regarded as a catering service. This could include:

• decorating a serving area/bar before the start;
• preparing a location for food (or even just heating it);
• serving;
• washing up or clearing/cleaning at the client's location;
• providing and clearing away bars/buffets, tables. 

If this type of human activity or service is provided by another tax-payer, there is still a simple supply of food and drinks, even though the VAT administration will more than likely indicate there has been an abuse of the law, once they consider this possible (e.g. linked businesses).  

A few specific topics

• Subcontracting
  When, in relation to the restaurant and catering service, the tax-payer engages a subcontractor who must issue him with a GKS receipt, he should not then issue a GKS receipt to his client, nor should he issue an invoice or proof of receipt. By contrast, he must only maintain a journal of receipts. The condition for this is that the tax-payer must not intervene at all in the preparation of meals or the purchase of the prepared foodstuffs. However, there is no problem regarding this exemption from issuing a GKS receipt if the tax-payer:
  • makes his own infrastructure available (e.g. consumption area, tables, chairs, plates, cutlery, glasses, etc.);
  • provides table service with his own staff or volunteers;
  • helps with clearing up or washing dishes;
  • takes responsibility for providing drinks. 
• Hotel operators
  If the restaurant and catering services which are provided by the hotel operator to hotel guests are included in the overall hotel invoice, a GKS receipt must be issued. The VAT administration splits the activities of a hotel operator across two sectors, whereby all processes, per set-up and sector, must follow the same regulations.
  • On the one hand, there is hotel activity whereby the hotel operator offers furnished accommodation to hotel guests, which may also correspond to the provision of food and drinks or additional services, which are only invoiced via an overall hotel invoice. The hotel operator does not need to concern himself with GKS. He must only issue a bill or proof of receipt or invoice to the client at the moment of payment for the service (there is a tolerance period of 7 calendar days for the invoice).
  • On the other hand, there is other hotel activity (e.g. restaurant operation). Within this sector, the GKS question must be asked (taking into account the turnover of restaurant services to non-hotel guests or hotel guests, which do not appear on an overall hotel bill, in order to realise the threshold amount of 25,000 EUR). 
• Operators of company restaurants
  • The company provides the meals itself
    If the company operates the company restaurant itself, it need not issue a GKS receipt or an invoice or proof of receipt, if the following conditions are (cumulatively) fulfilled:
    • the company has another economic activity besides the restaurant or catering service;
    • ​the company restaurant is only accessible to the personnel of the company or a linked company (a max. of 5% of the turnover may come from external users of the company restaurant);
    • the company restaurant is only accessible during working hours. 

      The company must maintain a journal of receipts.  

  • The company uses a subcontractor
    • If the company uses a subcontractor, the administration assumes there is a contract for the provision of catering services. The exemption to issuing a GKS receipts as a result of engaging a subcontractor (see 1. above) applies as long as all of the corresponding conditions are fulfilled. If, however, the subcontractor is not fully responsible for providing meals, the company is still not obliged to issue GKS receipts to personnel if there is fulfilment of the three listed conditions for when the company operates its own company restaurant (exemption company restaurant).  
• Cookery workshops
  The provision of cookery workshops is not considered as a restaurant or catering service by the VAT administration, so this turnover does not have to be taken into account when determining the threshold and whether GKS receipts must be issued. However, if the organiser of cookery workshops is already obliged to work with GKS receipts, he must also issue GKS receipts for these cookery workshops.  
• Cook at home
  The classification of the processes involved in a tax-payer preparing meals for a client at home, depends on the issue of who provided the ingredients. If they are the chef's ingredients, or the tax-payer bought them from the chef, this constitutes a catering service (12% in relation to food). In contrast, if they are the client's own ingredients, from an administrative viewpoint, the chef is carrying out material work which is subject to 21% even though, in our opinion, there is an issue regarding whether the VAT rate for the end-product should be applied.  
• Food and/or drinks in vending machines
  The VAT administration accepts that this is purely a supply of food and drink irrespective of where these vending machines are located, and the turnover does not therefore need to be considered when establishing the threshold for GKS.  
• Food and/or drink during a seminar
  For each case in this context, there must be an assessment of whether, on the basis of the underlying facts, there is a case of 'small business following large business' in which case the service which involves the provision of food and drink during a seminar is subject to the VAT regime for the main business (organising a seminar). The VAT administration assumes that this will be case, if:
  • the price of participation in the seminar is one fixed price, irrespective of whether the participant consumes the food and/or drink provided (in other words, the participant does not have a reduced price if he does not have any food or drink); AND
  • the total price of the catering provided by the organiser of the seminar is limited with respect to actual organisation of the seminar. This is certainly the case if the price of catering is a max. of 15% of the actual price of the seminar. 
• Appetizers and snacks
  From the administrative perspective, all pre-packed products for consumption at a location must be subject to 21% VAT (e.g. packet of crisps, Bifi sausage, bar of chocolate, etc.).  Snacks that are provided alongside drinks (e.g. cheese, nuts, crisps, salami, etc.) follow another regulation:
  • If they are offered to the client in small quantities, spontaneously and without a price increase, then they are regarded as an accompaniment to the drinks served. The VAT rate is 21% and the turnover not included in order to set the threshold for GKS.
  • The cut blocks of cheese and bits of salami, pieces of cake, tart and other non pre-packed foods that are ordered by the client and consumed at the location, however, are subject to 12% VAT and the turnover must be included in order to establish the GKS threshold. If this threshold is not realised, an invoice or proof of receipt must be issued. 

Other items that are covered in the circular

In the administrative circular, the VAT administration also determines the reference period for calculating the GKS threshold, both for existing companies on 1 July 2016, and for start-ups and takeovers. There is also coverage of exception measures (including exemption from article 44 W. VAT), cash register permits, moment of issue of GKS receipts, exceptional rules regarding payments, invoicing, retention, etc.  

An elaboration of all of these topics would be too extensive for this article however, if you have any questions regarding this new circular or would like additional information about GKS, don't hesitate to contact the VAT team at Moore Belgium.