VAT and issuing invoices

The VAT landscape has recently been redesigned significantly. There is the introduction of the cash register (which will after all only take place in 2014). Also there is a (r)evolution concerning invoicing. Time to highlight the changes.

The electronic invoice

The electronic invoice already exists for some years (since 2010). Although it has some unmistakable advantages compared to the paper invoice (a.o. an annual saving of several hundreds of millions of euros for Belgian companies), it does not have the expected success. The system suffers from growing pains of different kinds (legal, technical, ..).

At European level, the second invoicing directive has been issued, which should remedy these growing pains. This regulation will now be implemented into national law. For Belgium there are not that much changes concerning electronic invoicing (e.g. the conditions for archiving and acceptance are less strict).

Chargeability of VAT

The impact of issuing an invoice on the chargeability of VAT has been revised.

The chargeability of VAT has, amongst others, the following important consequences: i) the supplier should report the VAT due in his monthly or quarterly VAT return and pay the VAT due to the Treasury; ii) the recipient can deduct the VAT in the same period in his VAT return (provided it concerns a VAT payer, the deduction does not apply to persons acquiring goods or services as a final consumer).

The VAT Code provides different moments on which VAT becomes chargeable:

the moment of the supply of goods: at the time of transfer of ownership of the good to the buyer;

the moment when the service is completed;

for 'continuous' supplies of goods and services (e.g. electricity) upon periodical installments/settlements;

when the supplier or service provider receives (a part of) the price;

when an invoice is being issued: advantage is that the VAT can be deducted by the customer, irrespective of the arrangements made between the co-contracting parties on the actual time of payment and/or the supply of the goods or services.

As a consequence of the law changes, the issuance of an invoice triggers no longer the chargeability of VAT.

What are the concrete consequences for my company?

Which consequences these changes will have for you depends whether you act as supplier/service provider or as customer/recipient of the service.

As a client you could until now recuperate VAT as soon as the invoice was issued: so also when you didn't pay the VAT, which can provide you an important cash advantage. This advantage now disappears: only when you did pay the price or the actual supply has occurred, you can deduct the VAT. Positive consequence is - as a supplier - you need to pay the VAT to the Treasury upon payment by the customer or when the actual supply of goods or services took has been provided.

The new rules also have an accounting impact: if no supply of goods or services was performed (yet) and no payment has been received either, but an (advanced) invoice has been issued, you should refrain from reporting this invoice in your bookkeeping. This implies that the current accounting and software systems should be adapted.

Due to the practical difficulties experienced by taxable persons in respect of the new rules regarding the taxable moment, the VAT administration foresees in a transition period until 31 December 2013 (Decision no. E.T. 123.563 of 19 December 2012).