Following the adoption of the law implementing the new e-commerce VAT rules in Belgium, a Royal Decree has been published on 29 June 2021, amending several earlier Royal Decrees on VAT.
One of the most notable changes concerns the question of who can or will be deemed to import goods in Belgium for VAT purposes.
When importing goods in the EU, the importer of record is required to account for any VAT due upon the import of the goods. For goods with a value below or equal to EUR 150 for which the import one-stop shop (IOSS) is applied, the import itself will however be exempt from VAT.
When importing goods with a value below or equal to EUR 150 in Belgium without application of the IOSS, the VAT exemption will not apply. Consequently, the importer of record will be liable to account for the import VAT due. The amended Royal Decree no. 7 now specifies who must act as the importer of record for VAT purposes when importing such goods. To determine who will be deemed to act as the importer of record in this scenario, a distinction must be made based on whether the simplified import procedure, whereby the import VAT is paid by a courier or postal service, is used or not:
- When the simplified import procedure is used, the final consumer will always be deemed to act as the importer of record. The sale from the seller to the final customer will be deemed to be located in the third country of departure of the goods, which results in the sale itself not being subject to VAT. The import of the goods will however remain subject to VAT, since the VAT exemption under the IOSS is not applicable in this case. The courier or postal service will collect the VAT from the final customer and will subsequently transfer that VAT amount to the VAT administration.
- When the simplified import regime is not applied, the seller will be required to import the goods. As a result, the sale from the seller to the final customer will be deemed to take place in the Member State of importation, i.e. Belgium. Consequently, the seller will be required to register for VAT purposes in Belgium and will have to account for both the import VAT and the VAT on the local sale to the final customer. Although the import will not be exempt from VAT, the vendor will be able to recover this VAT through its periodical VAT return, ensuring VAT is only effectively paid to the Belgian State once.
Lastly, when importing goods into Belgium with a value over EUR 150, the IOSS regime and the simplified import procedure cannot be applied. In this case, both the seller and the final consumer could potentially act as the importer of record for VAT purposes. Where these goods are however shipped to a final customer in another Member State, the newly introduced e-commerce VAT law could lead to a situation whereby the final consumer would be confronted with a double taxation (see our previous newsletter in this regard). Where consignments with a value over EUR 150 are imported in one Member State and then are shipped to a final consumer in another Member State, VAT would be payable both upon the import in the Member State of import and in the Member State of arrival if the final consumer is named as the importer of record on the import document. To resolve this situation, article 6, § 2, subsection 3, 1° of Royal Decree No 7 now stipulates that the seller should always act as importer of record for import VAT. Since the IOSS cannot be applied, the seller will be required to obtain an individual Belgian VAT number. Although the import will not be exempt from VAT, the vendor will be able to recover this VAT through the periodic VAT declaration. In addition, the seller will also be required to apply for a VAT number and account for VAT on the extra-community distance sale in the Member State of final customer.
The potential double taxation is herewith resolved when importing goods in Belgium. Attention must still be paid however when importing goods in other EU Member States, since the changes to the rules regarding the importer of record only apply for Belgium. Other EU Member States might apply other principles with a potential double taxation on extra-community distance sales above EUR 150.
E-tailers should carefully assess the impact of the new rules on their business model. At Tiberghien we have closely examined the new e-commerce VAT rules. If you would like any further information on these new rules, please do not hesitate to contact us.
Stijn Vastmans - Partner, email@example.com
Gert Vranckx - Senior Associate, firstname.lastname@example.org
Lode Van Dessel - Associate, email@example.com