Everything you need to know about the VAT Franchisee status

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Introduction: what is the VAT Franchisee status?

In order to simplify accounting and tax obligations for small businesses, the tax office provides an optional VAT exemption regime.

If your annual income is below €25,000, you can request this status. For this threshold, only income subject to VAT should be taken into account, meaning income made in Belgium or in the EU.
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As a Franchisee, you would not have to do the following:

• Collect VAT on sales (i.e., charging VAT to the clients)

• Pay VAT to the state

• Submit Periodic VAT returns

• Also, you cannot deduct VAT from your business expenses

The benefits can be:

• your accounting will be very simplified (you will only have to submit a yearly income tax and a yearly client listing)

• you don't charge VAT, meaning your prices can be more competitive when selling to private individuals

• You don't deduct VAT on your purchases > this is only interesting if you don't have any major expenses to make in Belgium (investments, equipment, etc.).

1/ Calculation of the €25,000 threshold for the Franchisee

1. Annual turnover limit: If your annual sales (as defined below) do not exceed €25,000 excluding VAT, you can opt for the small business exemption scheme. Under this system, you don't have to charge VAT to your customers.
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2. VAT exclusion: Under this regime, you will not have to charge VAT or submit periodic VAT returns.
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3. Eligibility requirements:

• Annual sales must not exceed €25,000.

• Certain activities are excluded (e.g. VAT unit, construction companies, provision of furnished accommodation subject to VAT, certain activities subject to VAT in the Horeca sector).

1.1 Income to be included and excluded

→ Included in the calculation:

• All supplies of goods and all services that are subject to VAT when the small businesses scheme is not applied. The VAT rate used does not matter.

• Exports

• Intra-Community supplies of goods exempt from VAT

• Income from the rental of immovable property exempt from VAT

→ Excluded from the calculation:

• Sale of investment goods (e.g., a car sold by the company).

• Services provided outside Belgium, such as consulting for a company established in another EU member state, are subject to the general B2B rule. This means the service is considered to be located in the country where the recipient is established.

• Services exempted under "art. 44 CTVA" (e.g. therapeutic medical services), except for VAT-exempt property rental and non-therapeutic medical services.

2/ If the threshold is exceeded:

• If your annual turnover exceeds €25,000, you normally lose the benefit of the VAT exemption scheme and must switch to the ordinary VAT regime.
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• Exception – tolerance up to 10%:

  • If the excess does not exceed 10% (maximum €27,500), you may keep the exemption until the end of that calendar year.

  • From 1 January of the following year, you will be subject to the normal VAT system.

  • Example: In 2026, your turnover reaches €26,750 (7% above). You may keep the exemption for 2026, but from 1 January 2027 you must apply the normal system.
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• Exceeding by more than 10%:

  • You must switch immediately in the year when the threshold is passed, starting from the transaction that caused the excess.

  • Example: If you exceed €27,500 in 2026, you switch to the ordinary VAT system right away in 2026.
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• Always contact the FPS Finance (SPF Finances) when you exceed or approach the VAT franchise threshold. Request their written confirmation regarding your VAT status and keep it carefully.

How to change your Status?

All you have to do is complete a VAT identification amendment declaration (form 604B), either yourself online here or via your enterprise counter.

How to reflect your new VAT status in the app?

Don't forget to adjust your status in your settings:

1️⃣ Open the menu in the app.
2️⃣ Go to settings.
3️⃣ Access Tax settings.
4️⃣ Under VAT type, select "Subject to VAT".

✅ Your status is now updated!

3/ What are the administrative obligations under the franchise regime?

→ Submit the Intra-EU listing if necessary. All the steps are in this article.
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→ If a supplier from another EU country has invoiced you under the intra-EU reverse-charge system, then you must declare and pay VAT via the special VAT return (declaration 629). You will find all the information you need in this article.
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→ Submit your annual client listing. All the steps can be found in this article.

→ Of course, you must submit your annual income tax declaration.

4/ Changes since January 1st, 2025, regarding the VAT Franchisee status

Since January 1st, 2025, a double threshold applies to benefit from VAT Franchisee status:

• A national threshold, which remains fixed at €25,000 in Belgium.

• A European threshold of €100,000, allowing small businesses established in another EU Member State to avoid local VAT registration under certain conditions:

  • Their turnover in their country of establishment does not exceed the national threshold.

  • Their total turnover across the EU remains below €100,000.

Procedures and obligations to follow

1. Notification to the tax authorities

• In addition to the declaration of applying the small business scheme via form e604A or e604B, an additional notification is required to apply the exemption in other Member States.

• Once validated, the Belgian VAT number will be extended with the suffix "EX" (e.g., BE 0123.456.789 EX).

• The taxpayer must provide:

  → A list of the Member States where they wish to apply the exemption.

  → Their total turnover in Belgium and in each relevant Member State.

• Any changes in this information must be notified in advance to the Belgian tax authorities.

2. Quarterly declarations applicable only for the 100K scheme applicants

• Mandatory to monitor the exemption thresholds.

• The business must declare its turnover in Belgium and in other Member States (indicate "0" if no activity was carried out in a country).

3. Annual client listing

• Obligation for small businesses in Belgium.

• Since 2025: total turnover must be declared in full, even if the clients do not have a VAT number.

• From 2026: the listing must be submitted even if it is nihil.

Summary table of the changes to the VAT Franchisee status since 01/01/2025:

Still not sure if you're a franchisee or not? Here's a video to help you find out.

Author - Valesca Wilms

As content marketing lead at Accountable Belgium, Valesca writes about freelancing, self-employment, and taxes based on her own experience as a freelancer.

Who is Valesca ?