Belgium: Draft proposal for Belgian tax reform intends to harmonize the current VAT rates and introduces an obligation for B2B e-invoicing

The draft proposal is aimed at harmonising the current 6% and 12% rates into one single reduced rate of 9% (electricity, natural gas and heating via heating networks, as well as tap water, remaining subject to the 6% rate and coal becoming subject to the 21% VAT rate). Furthermore, the 0% rate will be extended to basic products such as fruits and vegetables, medicine, diapers, and public transportation).

In addition, to encourage the building of energy-efficient houses, the temporary reduced VAT rate for the demolition and reconstruction of old houses across Belgium will become permanent. It will, however, become 9% (instead of currently 6%).

Further to VAT rate changes, the draft proposal imposes an obligation of e-invoicing and e-reporting for B2B transactions. This will result in the removal for taxpayers of the obligation to submit an annual VAT client listing. However, the rules regarding e-reporting are yet to be defined. Regarding the mandatory use of e-invoices, rules will be introduced gradually depending on the company’s annual turnover for 2023.

Key takeaway

The draft tax reform presented by the Belgian Minister of Finance is still at a proposal stage, which is now discussed among the members of the federal government. It remains to be seen if and how the measures outlined above will be implemented but taxpayers should start considering how to prepare for those changes.