On 18 July 2023, the Belgian coalition government’s negotiations on the broad tax reform proposal failed. As a result, no major tax reform is expected during the current term of government as there is likely to be no capacity for the necessary fiscal measures in the budget round planned for October 2023.
In the summer of 2022, the minister of finance presented a blueprint for a broad tax reform (Dutch | French), intended to modernise the Belgian tax system and to shift the tax burden from work to capital and consumption. In March 2023, the minister of finance published a proposal based on this blueprint (Dutch | French). The first phase included 20 measures which would have taken effect as from 1 January 2024.
From an indirect tax perspective, the following changes were proposed, to shift taxation onto consumption and pollution to encourage sustainable and healthy choices:
The proposal also includes measures to digitalise the VAT system by introducing e-invoicing and e-reporting, which would lead to simplified administration.
The potential consequences and possible actions if the proposed indirect tax reforms do not proceed include the following:
The current temporary VAT reduction for demolition and reconstruction would expire on 31 December 2023. It is hoped that this measure would once again be temporarily extended, or a transitional measure put in place. If the VAT reduction were no longer available, the VAT cost of housing reconstruction activities would increase to 21%; however, renovation activities would still be subject to the reduced rate of 6%, assuming that the harmonisation of VAT rates does not proceed.
Deloitte Belgium’s real estate team is available to review how to best approach each specific demolition and reconstruction or renovation project going forward.
Although the Belgian government has presented proposals that would introduce mandatory business-to-business (B2B) e-invoicing and e-reporting for domestic transactions with the first deadlines in 2024, it seems that the government’s implementation programme has taken a step backwards, moving from a proposal to an intention. The 2024 deadlines that were stated in the proposal have therefore become obsolete. Business may still voluntarily adopt e-invoicing, which could result in a reduction of their administrative burden, and therefore it may be advisable to analyse the e-invoicing and automation opportunities for both inbound and outbound transactions.
Deloitte Belgium offers, in partnership with Arco Information, a comprehensive hybrid invoicing and integrated tax solution for generating and distributing e-invoices.
A clearer perspective on the changes is expected in autumn 2023. In the longer term, the introduction of mandatory e-invoicing and transactional reporting remains highly likely, especially given the intentions expressed over previous year by the Ministry of Finance, and in the broader context of the European Union’s VAT in the Digital Age proposals. Businesses active in Belgium should therefore keep this topic on the finance and tax agenda. It remains to be seen whether the other measures, such as the harmonisation of the reduced VAT rates, will ever be implemented.
Joaquim is a lawyer at Deloitte Legal, specialising in all VAT matters. He has over 10 years of experience in advisory services including guiding companies through administrative and court procedures. The majority of his clients are privately held companies and include real estate developers, law firms, health care suppliers and governmental institutions. Since 2009 he is a member of the Brussels bar. He published regularly on VAT matters and lectures at the KULeuven (University Leuven) on VAT aspects of real estate and is research assistant at the UGent (University of Ghent).
Danny is head of the tax advisory practice. He is a tax lawyer specialised in VAT, in particular with respect to real estate and financial transactions, as well as eco taxes and contributions. As partner in the firm, Danny focuses on VAT consulting for Belgian clients in the private and public sectors and the broad corporate market at national and international level. In the real estate industry, Danny focuses on VAT consulting for clients in the private (e.g. real estate developers, REITs, hospitals, senior housing, etc.) and public sectors and the broad corporate market at national and international level. Besides the specific VAT topics (e.g. reduced VAT rates, VAT exemptions), he has also good knowledge of alternative financing of real estate and transfer duties. Danny is a recommended lawyer in the Chambers Europe and Legal 500 directories.