VAT exemption for medical services adjusted
The Belgian VAT authorities have traditionally given a wide material scope of application with regard to the exemption for medical services. It did, however, limit this exemption to regulated medical professions. Following various judgements by the Court of Justice, the legislator has now adapted the medical exemption, and the new legislation entered into force on 1 January 2022. On 20 December, the VAT authorities published a circular in which the new regulation is discussed and, above all, clarified. Read a discussion of that circular here.
VAT exemption for export transport services adapted
The Belgian administration has complied with the request of the European Commission to implement the decision of the Court of Justice in the LC case. It has issued a circular, according to which the VAT exemption for transport services linked to exports is only applicable if these services are provided for the consignor or the consignee of the exported goods. Transporters who subcontract transport for export can thereby no longer claim the VAT exemption. An extensive discussion of this innovation can be found here.
The entry into force of this change was originally scheduled for 1 January 2022. A new circular published on 22 November 2021 postponed the entry into force until 1 April 2022, however.
Renovation at 6%: certificate no longer required, but statement on the invoice
In order to be able to apply the 6% rate, contractors have, for decades, had to request a certificate from the building owner. This certificate confirms the age and use of the house on which work is being carried out. As of 1 January 2022, a new draft law provides for the replacement of this additional administrative obligation by a specific statement on the invoice. During a transitional period that runs until 30 June 2022, contractors can still use the certificate.
The invoice statement shall read as follows:
VAT rate: In the absence of a written dispute within a period of one month from the receipt of the invoice, the customer is deemed to have acknowledged that:
(1) the works are being carried out on a dwelling whose first occupation took place in a calendar year that is at least ten/fifteen years prior to the date of the first invoice relating to those works,
(2) after completion of those works, the dwelling will be used exclusively or predominantly as a private dwelling and
(3) the works are provided for, and invoiced to a final consumer.
If at least one of these conditions is not fulfilled, the standard VAT rate of 21% will apply and the customer will be liable for the payment of the tax, interest and fines due in respect of those conditions.
Thanks to this invoice statement, the contractor is no longer liable for the erroneous application of the reduced rate if the house does not meet the condition of age or private use. The customer has one month to dispute the statement on the invoice.
New conditions for 'provision of furnished accommodation'
The 'provision of furnished accommodation' is subject to 6% VAT. An exemption applies to 'immovable property rental'. In a ruling, the tax authorities ruled that student rooms that provide sufficient additional services qualify as 'providing furnished accommodation'. And a VAT rate of 6% applies to this.
This ruling gave rise to an amendment that is expected to enter into force on 1 July 2022. In order to qualify as "provision of furnished accommodation", the duration of the stay may not exceed 3 months. It may not involve a purely passive rental. At least one of the following services must be provided: a physical reception, supply and replacement of household linen for stays of more than one week or the daily provision of breakfast.
Various amendments
In addition to the above high-impact changes, a few smaller changes will come into effect from 2022.
- The supply of a hair prosthesis can, under certain conditions, be subject to the 6% rate.
- Flat-rate VAT schemes will be phased out. In new cases, the choice of a flat rate will no longer exist as of 2022. For existing cases, the flat-rate VAT scheme will not be abolished until 1 January 2028.
On the schedule?
Finance Minister Vincent Van Peteghem has received the green light from Europe for extending the VAT reduction for demolition and reconstruction. This relief measure would normally run until 31 December 2022. At both the Flemish and the federal level, however, people were in favour of extending this period.
In addition, Europe has also given the option of applying the reduced VAT rate to (electric) bicycles. The VAT reduction on the purchase of an (electric) bicycle was already unanimously adopted in the Parliamentary Committee on Finance in April 2019. The green light from Europe means that this bill can also be soon put into practice.
Other VAT innovations will undoubtedly follow in the course of 2022. But you can already prepare for the above. Do you have any questions about this? Or would you like advice on how to best implement these innovations? Please don’t hesitate to contact our VAT team. We will be happy to help you.
