COVID-19 related VAT measure: Relief from the obligation to make a December advance payment
In order to mitigate potential cash flow issues for businesses, the Federal Tax Authorities announced that taxable persons would be exempt from making a December advance payment for 2020 (Circular letter 2020/C/133). A recent circular letter from the VAT authorities now provides some more information on this measure.
Principle
As a general rule VAT-taxable persons are required to make an advance payment to the Belgian State for the VAT that is due over the transactions carried out during the month of December (submission of monthly VAT returns) or in the fourth quarter (submission of quarterly VAT returns) of each calendar year. This December advance payment should hereby be made at the latest on 24 December. Taxable person not respecting this obligation face late payment interest and significant proportional penalties.
The amount of the December advance payment is calculated as follows:
- option 1: the advance payment could be calculated based on the VAT effectively due on the transactions carried out as from 1 December until 20 December (submission of monthly VAT returns) resp. as from 1 October until 20 December (submission of quarterly VAT returns)
or
- option 2: the advance payment could be equal to the VAT that was due on the transactions carried out during the month November (submission of monthly VAT returns) resp. the third quarter (submission of quarterly VAT returns) of the ongoing calendar year.
Temporary measure (or not)
As a derogation to this principle, it has been decided, considering the COVID-19 pandemic, that VAT-taxable persons are not obliged to make a December advance payment for calendar year 2020.
This measure only applies to the VAT return related to the transactions carried out during December 2020 (submission of monthly VAT returns) or the fourth quarter of 2020 (submission of quarterly VAT returns).
As a result the VAT-taxable person should not complete box 91 of the Belgian VAT return (without this non-completion being interpreted as a choice to make an advance payment equal to the VAT that was due on the transactions carried out during the month November 2020 resp. the third quarter of 2020).
The VAT due over the transactions carried out during December 2020 (submission of monthly VAT returns) resp. the fourth quarter of 2020 (submission of quarterly VAT returns) should be paid as a whole to the Belgian State no later than 20 January 2021.
On a final note, while the circular states that it concerns a temporary measure (only for 2020) the Minister for Finance announced in his recent policy brief that he will look into the possibility of permanently abolishing the December advance payment.
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
Elise Theys
Associate Attorney at lawElise Theys, attorney at law, is a member of the Indirect Tax practice group of Loyens & Loeff in Belgium.
T: +32 2 743 43 02 E: elise.theys@loyensloeff.com
