You could already read it in the newspaper: the Belgian Council of Ministers has approved a draft law aimed at modernising and simplifying the processing of periodic VAT returns, in particular where taxable persons fail to submit those returns. However, the draft goes a lot further than that and includes a completely new back office. The VAT current account will be abolished and the modalities for the refund and payment of VAT will be radically changed.
From 2024, taxpayers who do not submit their VAT returns or submit them late will receive a proposal for a replacement return, whereby the tax authorities will base themselves on the highest amount of the VAT payable position in the past twelve months (with a minimum of 2,100 €). The new procedure should encourage taxable persons to always submit their periodic returns on time.
The current account, managing payments and refunds as well as debts and balances, will be abolished.
The legislator's intention is to stimulate the correct application of the rules ("compliance") as much as possible. And this not only through incentives, but also through coercive measures (administrative fines, tax increases, etc.). The new measures, which are part of combating the so-called VAT gap, should take effect from 2024.
VAT revenues represent more than 26% of the tax revenue collected in Belgium and is one of the most important sources of income for the government. However, there is still a big gap between what is actually received and what should be collected. This gap, the so-called "VAT gap", is estimated at 4.44 billion euros for Belgium, or more than 12 percent of VAT revenues. The Belgian VAT gap is therefore about 12%, which is an average within the EU.
The VAT gap is caused by a multitude of factors (such as fraud, bankruptcies, insolvency, incorrect calculations), but can also be the result of human errors in collection and recovery procedures at the tax authorities. The process currently relies on manual interventions. The aim is now to reduce that gap by means of targeted measures. These measures aim to harmonize and automate the collection processes.
These reforms are in line with the government's digital agenda, which promotes the digitalisation of interactions between citizens and economic actors on the one hand and the various public institutions on the other.
Abolition of current account
The current account, which manages payments and refunds, will be replaced by a new more flexible instrument, the so-called VAT provision account (new Article 83bis of the VAT Code).
Any taxpayer will be able to reclaim all or part of his credit "in a simple manner" via his account on the 'My Minfin' application – without complying with special formalities. The amounts in this account can also be used to create provisions for future debts. The specific modalities of this provision account are not yet known.
With the disappearance of the current account, the so-called special account that is opened when VAT returns are not submitted (timely) and / or in the event of non-payment of VAT debts will also be abolished. Failure to submit VAT returns will henceforth be automatically sanctioned (see below).
New refund procedure
In contrast to the current procedure, refunds via the VAT return will only relate to the concerning declaration period (new Article 76 of the VAT Code). Accumulated credits from previous declaration periods will have to be reclaimed via a separate procedure. The taxpayer will be able to request a refund via his account in the "My Minfin" application. Refunds of the VAT credit in the provision account can be requested in part or in full. Further details about this procedure will be provided in a new royal decree.
In order to be eligible for a refund, the taxable person will need to have all his periodic VAT returns from the past six months submitted on time and the VAT credit must be at least 50 euros. VAT payers filing monthly returns will be able to reclaim their VAT credit on a monthly basis (without a special permit being required).
The new procedure should allow companies to submit their returns in due course to recover their VAT credits more quickly. The refund will normally be paid within a maximum period of three months after the declaration period. This maximum period of three months may be shortened. The intention is to shorten this period to two months for taxpayers who submit periodic monthly returns. The accelerated refund of VAT credits will be facilitated by a future amendment to Royal Decree No. 4.
The absence of a satisfactory response to a request for information from the VAT authorities is now also grounds for withholding the VAT credit.
New declaration period – End of holiday regime?
The deadline for the submission of quarterly declarations is extended by 5 days (i.e. 25th of each month). However, for VAT payers filing monthly returns, the deadline for submission remains unchanged. The current administrative tolerances whereby fines are not imposed in the event of a late submission are reportedly being changed.
Late submission sanctions
It appears that 2% of the VAT taxable persons do not systematically submit their returns. The current procedure of ex officio assessment is experienced as cumbersome and complex. For that reason, it often happens that the VAT authorities react lately when no periodic returns are submitted or VAT due is not paid. This delay partly causes the loss of tax revenue, either because the taxpayers are insolvent in the meantime or have made themselves insolvent, or because the claims are already time-barred. After all, the statistics clearly show that the recovery rate of VAT debts decreases fairly quickly over time.
Special attention is therefore paid to taxpayers who do not submit their returns or do not submit them on time. From now on, they will receive an automatic proposal for a replacement return - based on the proposal for a simplified personal income tax return (Article 53, § 1b, new, of the VAT Code). The proposal, which will be sent at the end of a period of 3 months following the relevant return period, will be based on the highest VAT due position of the previous twelve months (box  of the VAT return). However, there is always a minimum (subject to annual indexation) amount of EUR 2,100 (Article 53, § 1ter, ninth paragraph, new, of the VAT Code).
Taxpayers will then have to respond to the proposal within a month. If the VAT return is still submitted in that period, only the penalty for late submission remains. If the VAT return is not filed, the replacement return becomes final and that return and the VAT amount due will be notified by registered mail. The notification of the replacement return that has become final does not affect the rights of the tax authorities to correct the amount of tax due later if necessary (Article 53, § 1ter, seventh paragraph, new, of the VAT Code). In accordance with article 91, § 1, paragraph 1, 1 °, of the VAT Code, late payment interests calculated on the amount included in the final replacement return will start accruing.
In the event of repeated non-submission of the return, the amount of VAT due will be increased based on a scale ranging from 25 to 200%.
Legal embedding of the response period
The period within which a taxable person must respond to a request for information from the VAT authorities will be stipulated in the VAT law. A period of 1 month will apply. This can be shortened to 10 days in certain cases (e.g. when the rights of the treasury are compromised or the question is part of a refund check) or can be extended for legal reasons. In other words, the flexible attitude we know today will be abandoned. This 1-month response period is calculated in the same way as the response period for income taxes (Article 316 of the CIR 92).
Payment by direct debit possible
Finally, in the future it will be possible to pay VAT debts by direct debit.
Coming into force
The measures should take effect from 2024.
However, in view of the significant IT developments brought about by the reforms, it cannot be guaranteed with absolute certainty that the necessary technical infrastructure will be ready. It is therefore foreseen that these reforms will go into force at a later date. Such a postponement will only be possible for a limited period, in particular a maximum of twelve months, or therefore no later than 1 January 2025.
The preliminary draft is currently before the Council of State for advice.