Belgian VAT authorities have announced they will fully uphold and apply the September 2014 Court of Justice of the European Union (CJEU) judgment in the Skandia America case.
You can find more information on the case, here.
Changes will take effect from July 1 2015, with taxpayers required to assess the impact for their past transactions.
In essence, the changes mean:
- When purchasing services taxable and located (or localised) in Belgium, the branch or head office must self-account for Belgian VAT in the instance where one is a member of a VAT group either in Belgium or abroad.
- The VAT deduction rights at the level of the VAT group (if a "mixed taxpayer") will determine whether VAT will be deductible in Belgium. In deciding the deduction rights, the services recharged by a branch or head office to its foreign head office or branch (when a member of a VAT group), will be taken into account.
The above is to apply when the services are taxable from a VAT perspective, regardless of whether the purchasing entity recharges the costs to another member of the VAT group in Belgium. VAT is therefore to be reverse charged in any case.
Also, where the Belgium branch or the head-office is a mixed taxpayer using the general pro rata method to determine its percentage of input VAT deduction right, it can only determine this percentage on the basis of its own turnover, and not on one of its foreign branches.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.