A significant reform of the Belgian reverse charge rule for immovable work with effect from 01.01.2023

A new Royal Decree has introduced a number of important VAT changes to Royal Decrees Nos. 1, 2, 3, 4, 10, 19, 22 and 59 (RD 26.10.2022, BS 10.11.2022).

One of the most striking changes concerns the scope for the reverse charge on immovable work.

Another important (previously announced) change deals with the new electronic (prior) notification procedure that mixed VAT taxpayers must comply with if they wish to exercise their VAT deduction according to the actual use method.

The new Royal Decree specifies the modalities of the new procedure that should arm the tax authorities to audit more efficiently the VAT position of so-called mixed VAT taxpayers. We will report on this important topic via a separate alert.

Both changes will enter into force on January 1, 2023
Article 20 of Royal Decree No. 1 states that the reverse charge mechanism applies if a taxpayer established in Belgium performs immovable work for either (1) a taxpayer established in Belgium who is required to file periodic VAT returns or (2) a taxpayer not established in Belgium with VAT registration through the appointment of a fiscal representative.

A number of significant reforms have been made to this reverse charge scheme.

Direct VAT registrations will also qualify for reverse charge

For the application of the reverse charge mechanism, the foreign client will no longer need to have a tax representative.

A foreign taxpayer with direct VAT registration will also be able to benefit from the reverse charge.

Notification requirement

From now on, there will be an obligation for the customer to inform his service provider when the latter does not qualify for the reverse charge. This targets the situations of customers who are VAT registered, but do not submit periodic returns (e.g. small enterprises scheme).

New invoice reference

In addition, another important change in the area of invoicing was introduced. Article 20, § 3, first paragraph, new, of Royal Decree No. 1 now stipulates that invoices issued by the service provider must contain the following statement:

“Reverse charge. In the absence of a written objection within a period of one month from receipt of the invoice, the customer shall be deemed to acknowledge that he is a taxable person required to submit periodic returns. If that condition is not met, the customer shall be liable with respect to that condition for the payment of tax, interest and fines due.”

The purpose of this reference is to create awareness with customers of their personal liability, when they have not informed their service provider that they can’t benefit from the reverse charge because they don’t file periodic VAT returns.