Following the recent decision of the European Court of Justice concerning the right to deduct input VAT charged on invoices, the Belgian VAT Administration issued on 12 October 2017, a Circular letter providing guidelines on the requirement of a compliant invoice, to ensure the right to deduct incoming VAT.
As a basic principle, input VAT charged on an invoice issued by a supplier is not deductible in the hands of the taxable person receiving this invoice, if the same does not comply with the formal requirements Royal Decree nr. 1.
Following recent case law from the Court of Justice of the European Union the application of the right to deduct VAT cannot be refused on the sole basis that certain mandatory invoicing requirements are missing from the invoice.
As such, the European Court of Justice imposes to the VAT Administration not only to examine the invoice itself, but also take into account additional information provided by the taxable person. In other words, if a taxable person can prove, by any other means, that all material conditions are fulfilled, the input VAT should be deductible.
This is a substantial change for the Belgian VAT Administration who has always adopted in the past a strict interpretation of the need to be in the possession of a compliant invoice to allow VAT deduction.
Following these European cases the Belgian VAT authorities have been obliged to admit that if an invoice is not compliant and/or incomplete according to requirements of Royal Decree nr 1, the right to deduct the input VAT charged on this invoice will still be applicable if the taxpayer can, before a VAT audit is finalized, provided the authorities with (1) a corrective invoice and/or (2) additional evidence that unambiguously relates to the concerned invoice.
By formalizing this position in a Circular Letter, this new viewpoint of the VAT Administration will have a significant impact on the way in which VAT audits will be conducted. Non-compliant invoices will no longer automatically lead to regularization but will enable the audited taxable persons to obtain and provide corrective invoices or circumstantial evidence, preserving the VAT deduction executed on the invoice.
REMINDER For VAT Registered Persons Liable To File Quarterly VAT Returns.
Since April 1, 2017 you are not liable anymore to make advance payments by the 20th of the second and third month following the previous quarter. However, like for VAT taxable persons submitting monthly VAT returns, there is a new obligation for you to comply with a “December advance payment” by 24 December 2017. Practically, the amount of the advance payment will be calculated over the outgoing and incoming transactions over the period 1 October 2017 up till (and including) 20 December 2017, or the VAT payable amount resulting from the Q3 2017 VAT return is paid once again by 24 December 2017.