Let’s start by the beginning: what does VAT stand for?
Knowing what VAT stands for is probably the easiest part 🙂: VAT stands for Value Added Tax and is the tax that every consumer pays when buying goods or services.
VAT applies to most commercial transactions and as a result, it is a major source of income for Belgium. The government, of course, wants that system to run as smoothly as possible.
Your clients will also pay a VAT, when they buy a product or service from you. As a supplier, you collect this tax from your clients and you transfer the amount back to the government.
Basically, in what regards VAT, you are an intermediary between the state and the end-consumer.
The percentage of this tax depends on what kind of goods or services you are selling and how necessary they are to the consumer.
When selling goods or services, you should know and apply the right VAT rate to your prices.
Through your VAT returns and the associated payments, the government knows exactly how much it is due and when to get it.
Filing VAT creates a genuine administrative burden for self-employed: before crying for support, let’s quickly review who is exempt from this duty.
Certain liberal professions that focus on assistance for individuals are not subject to VAT. As a result, they also do not have a VAT number. For example, doctors, physiotherapists, and help at home, are part of this category.
Good (belated) news! Since January 2016, if your annual turnover is below 25,000 euros, you can opt for the VAT exemption scheme 👍
The advantage of this system? You are no more bothered with VAT returns.
You drop VAT from your invoices, making you directly more affordable for customers that don’t recover VAT and easing the cash-flows of all others.
The drawback? Dropping VAT also means that you can not get the VAT back on your purchases.
Once your annual turnover is higher than 25,000 euros, don’t forget to adjust to the VAT system (and notify your customers as well).
Do you meet all of these conditions?
Here is how you can opt for the VAT exemption scheme:
If you are subject to VAT, you have to submit your VAT returns and make the corresponding payments.
No worries though, we’re here to help. Just for you, here is a quick guide to filing VAT in Belgium:
Let’s start at the beginning: in general, you’re receiving VAT on everything that you sell and you’re paying VAT on everything that you buy. The difference between the two goes into the treasury of the state. You’re communicating this amount via your VAT return to the Ministry of Finance.
To submit your VAT return, you have to go to the website of Intervat. Small pro tip: keep your identity card, your PIN code and your card reader at hand. You will need them before you can start.
In general, the steps to follow (in Dutch) are > “Welkomstpagina / Verzending via scherm / Nieuw / Periodieke btw aangifte.
From here you need to follow the guide, screen by screen. Make sure you understand everything and don’t make any mistakes while submitting your VAT information. For English speakers, don’t hesitate to ask a Dutch speaking or French-speaking friend to guide you through the process!
Remember that the government is very strict and imposes penalties on infringement, so be sure to not get distracted while doing this… or maybe let your accountant (or Accountable) do this for you.
It all depends… Your annual turnover is
The Ministry of Finance made a calendar with all the different payment and return periods.
Some professions that do not send a lot of invoices (think of butchers, bakers, small business owners, hairdressers, etc.) and whose turnover does not exceed 750,000 euros can opt for a lump sum VAT scheme.
As stated earlier you have to send in a list of all your taxable customers on the 31st of March, every year. You can do this via Intervat, and the tutorial on how to do this is located here, follow “Welkomstpagina / Verzending via scherm / Nieuw / Klantenlisting”
This is the list of all (trans)actions your company did for VAT identified customers in other EU countries. You need to send in this list every three months (if you file your VAT every three months) or every month (if you file your VAT every month).
How? Intervat of course 😎, following the same tutorial as with your annual list of taxable customers.
You have to fill in form 604A with the correct type of business you want to start. Not feeling comfortable enough to do it by yourself? You can also do this with at a registered business counter or with an accountant (these options are probably not free). Your VAT number is the same as your company number, with BE in front of it.
You want to change things like your address, or the name of your business? In this case, you need to submit a form 604B to update your status at the Administration in the month following those changes.
Sure thing, there is also a form for that one: form 604C is the one you’re looking for in this case. Don’t forget to submit it to the Administration following the month that you stop your activities that are subject to VAT.
Does it still sound too complex? Too expensive? No worries, we got you covered!
Accountable is a mobile application that connects to your professional bank account and automates the biggest part of all your financial administration. When you purchase or sell something, all you have to do is take a picture of the receipt or invoice and validate the suggestions the app provides to you.
What has your biggest frustration with VAT filing been over the years? Or has everything been a smooth ride up until now? Let us know in the comments below!