Federal Minister of Finance in Belgium unveils tax reform plan, including significant VAT changes

On February 28th, 2023, the Federal Minister of Finance released a proposal for a “broad tax reform” that includes a significant VAT reform. The proposed tax measures would result in a reduction of the tax burden on labor for a total of 6 billion Euro, partly compensated by an increase of taxes on consumption.
VAT rate changes: new 9% rate, 0% scope broadened, 12% abolished and 6% in a reduced amount of cases

The proposed changes to the VAT rate seek to broaden the scope of the zero percent VAT rate to certain ‘essential’ items like fruits, vegetables, medication, diapers, intimate hygiene products, and public transportation. Additionally, the existing reduced rates of 6% and 12% would be combined into a new reduced rate of 9%. The reduced rate of 6% would remain for certain basic utilities like electricity, natural gas, heating, and tap water, while coal, which is highly polluting, would be subject to the standard rate of 21%.

Demolition and reconstruction rate made permanent, but 9% instead of 6%

The proposed VAT reform also includes making the current temporary reduced rate for the demolition and reconstruction of private homes permanent at the new rate of 9% instead of the current 6%.

Mandatory e-invoicing / e-reporting

Additionally, the proposal includes measures to enhance the efficient collection of VAT by implementing mandatory e-invoicing and e-reporting.

The rules will be gradually introduced, beginning on July 1st, 2024, for taxpayers with an annual turnover, excluding VAT, of over 9,000,000 Euro in calendar year 2023. Taxpayers with an annual turnover, excluding VAT, between 700,000 Euro and 9,000,000 Euro, or those with a turnover over 700,000 Euro in calendar year 2024, will be subject to these rules starting on January 1st, 2025. Other taxpayers will be required to comply with these rules at a later date.

The new e-reporting will replace the annual customer listing.

What’s next? Upcoming second reform?

Let's not forget that the proposed changes still require approval from the government before they can be implemented. Additionally, the proposed "broad tax reform" will require a second reform after the parliamentary elections in 2024, according to the Minister.