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Monday, 06 April 2020

Are there any other possibilities to optimise the cashflow position of my business?

Stijn Vastmans

Stijn Vastmans

Partner
Ghent
Loulou Geboers

Loulou Geboers

Senior Associate
Brussels

In addition to the above-mentioned special measures in the context of the COVID-19 outbreak, there are still opportunities under the existing VAT-regulation that VAT-taxable persons might use. We will list a number of these for you below.

Monthly VAT refund permit

VAT-taxable persons whose turnover during the previous calendar year consisted for at least 30% of export sales, intra-Community supplies, immovable work that is subject to the reduced VAT rate etc.  and whose VAT-credit during the previous calendar year amounted to at least EUR 12.000 can apply for a monthly VAT refund permit. For this, a written request must be done towards the Belgian VAT authorities.

Monthly VAT refund for start-ups

Start-ups often incur a lot of VAT on investment costs and only a limited amount of VAT due on the realized turnover. Therefore, the pre-financing of VAT can result in a significant cost.

As from 1 January 2020, start-up companies can apply for a monthly reimbursement of their VAT credit during the first 24 months following the start of their economic activity. This regulation applies in principle to all start-ups. It does, however, require the start-up company files periodical monthly VAT returns, electronically. In addition, all VAT returns need to be filed on time in order to benefit from this system. Finally, the VAT credit must amount to at least EUR 245 per month.

No prior authorisation must be obtained for this accelerated refund procedure nor does it have to be requested to the Belgian VAT authorities. If all conditions are met - and the VAT refund is requested in the periodical VAT return - this procedure applies automatically.

Other VAT-credit situations – specific request in the VAT return

The Belgian VAT authorities do not automatically refund a company’s VAT-credit. The VAT-credit is in principle automatically carried forward to the next period, unless a specific VAT refund has been requested. Monthly or quarterly VAT-declarants, who are not eligible for a monthly refund permit, can improve their VAT cashflow by explicitly requesting a VAT refund in the appropriate box in the periodical VAT return.

Note that the amount of the VAT-credit must be large enough. This means that there needs to be a balance of at least EUR 615 for quarterly declarants and a balance of at least EUR 1.485 for monthly declarants. The VAT return of the fourth quarter and the December VAT return are an exception: the balance must then only amount to EUR 245.

Currently, this general refund procedure does not provide for an accelerated VAT repayment. In this context, an effective repayment period of 3 to 6 months must be taken into account.

Postpone invoicing and/or advance payments 

The invoice date often determines to which VAT period a certain transaction belongs in a B2B-context. This means that postponing the invoice date, within the legal deadlines, can improve your VAT cashflow position.

The VAT that is due on the delivery of goods, for example, delivered in March 2020 and invoiced to your customer no later than 15 April 2020, is due in April 2020. In this case, under the general rules, this VAT must be paid before 20 May 2020.

Additionally, it should be examined whether the issuance of advance payments can be limited or postponed since the VAT on this amount becomes due as soon as the advance payment invoice is issued.

Thus, it can be interesting to consider  your company's invoicing policy in order to postpone the payment of VAT for as long as possible.

Cash accounting scheme

It needs to be examined whether there are possibilities within your company to link the payment of VAT to the actual date of receipt of the payment.

For the supply of goods and services to private individuals, the main rule is that VAT does not become due until payment is received, regardless of whether or not an invoice is issued for this supply. This is only different with respect to invoices to private individuals in which the issuance of an invoice is required (e.g. the sale of new buildings, the sale of vehicles, …).

For the supply of goods and services to public authorities, the VAT only becomes due when payment is received.

If you have any questions on this subject, please contact the authors of this article.

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