5 FAQs on VAT: as a non-resident company carrying out operations in Belgium (3)
Vandelanotte International is contacted by numerous non-resident companies that operate in Belgium when they come into contact with Belgian VAT. It is noticeable that many companies come up with the same questions. This short series aims to provide you with the answers to the five most frequently asked questions.
This week: avoiding the pre-financing of VAT
Question: We are a foreign company with a Belgian VAT number active in the sale of goods. We import goods from outside the EU into Belgium in order to sell them to Belgian and European companies. How can we avoid the pre-financing of Belgian VAT?
Answer: When a foreign company (registered in Belgium for VAT purposes) imports goods from outside the EU, in principle Belgian VAT is owed when these goods are brought into free circulation in Belgium. This VAT must be paid to the customs authorities immediately at the time of importation. Subsequently, this VAT can be deducted from the next VAT return. In all cases, this constitutes a pre-financing of VAT and can signify a heavy financial burden for the company.
To avoid the pre-financing, the company can request an E.T. 14.000 permit. This permit ensures that no VAT is payable at the time of importation. The VAT can then be postponed to the next VAT return. Because this VAT is in principle immediately deductible, this constitutes a neutral operation.
If, after being imported into Belgium, the goods are sold to a company in another country within the EU, this constitutes anintra-Community supplywhich is exempt from VAT. In such a transaction, by definition, it is not necessary to pre-finance VAT.
If, after being imported into Belgium, goods are sold to a Belgian company, this constitutes a Belgian domestic supply which is subject to Belgian VAT. Normally, VAT at 21% must be charged to the customer. This can lead to the pre-financing of VAT if the customer pays the invoice at a later time than when the VAT is payable to the Belgian VAT Office. However, this is not the case when the supply is made by a company resident in Belgium which itself submits periodic VAT returns and if the supplier itself is not established in Belgium. In that case, VAT is payable by the contractor and an invoice must be drawn up with"VAT transfer"instead of Belgian VAT. In this type of transaction, by definition it is likewise not necessary to pre-finance VAT.
If you would like to find out more about this topic or any other VAT issues, then please feel free to contact one of our VAT specialists via email@example.com.
We base our advice on current legislation, interpretations and legal doctrine. This does not prevent the administration from being able to challenge it or to change existing interpretations.