Belgian tax authorities (finally) open the doors to charitable donations
Generally, ‘free’ does not go well with VAT. As a general rule, input VAT will not be deductible for goods or services which are supplied for free. However, the VAT authorities have over the years foreseen some exceptions to this principle.
In line with the gradual relaxation of the rules relating to food donations in 2013 and 2015, tax authorities have extended the scope of the exception to the self-supply rule which now includes non-food goods. This specific VAT regime is detailed in the new circular letter 2020/C/116.
Driven by the objectives of fighting poverty and supporting sustainable development, those measures are subject to certain conditions:
Whom?
Taxable persons who bought or produced the goods (and for which VAT is totally or partially deductible)
What?
Food goods or essential non-food goods that can no longer be sold on market conditions (e.g goods close to the expiry date, damaged packaging, …).
To whom?
- Food banks;
- Public bodies;
- Charitable organizations;
- Distribution platforms.
The goods cannot be distributed directly to people in need.
Formalities?
A specific VAT document must, in principle, be issued for each donation. However, the circular provides for a tolerance and a summary document can be issued each month.
In addition to those permanent measures, tax authorities also decided that a donation of computer to schools would not lead – temporarily - to a VAT adjustment (see circular letter 2020/C/104). This measure, taken in view of the COVID-19 pandemic, applies until 31 December 2020.
Our Indirect Tax team would be happy to help you implement or review your current donation scheme.
Bert Gevers
Partner Attorney at LawBert Gevers is a local partner in our Brussels office. He heads of the Loyens & Loeff Indirect Tax Practice Group in Belgium, is a core member of the Corporate Investigations Team and co-heads the Food and Beverages Team.
T: +32 2 743 43 18 E: bert.gevers@loyensloeff.com
Ninon Van Hecke
Associate Attorney at lawNinon Van Hecke, attorney at law, is a member of the Loyens & Loeff Indirect Tax Practice Group in Belgium. She is an associate in our office in Brussels and specializes in VAT .
T: +32 2 700 10 16 E: ninon.van.hecke@loyensloeff.com
Hugo Salvi
Associate Attorney at lawHugo Salvi, attorney at law, is a member of the Loyens & Loeff Indirect Tax Practice Group. He works as an associate in the Brussels office in Belgium.
T: +32 2 773 23 91 E: hugo.salvi@loyensloeff.com
