Month: January 2021

Since January 1^st 2021, as a result of the Brexit, the VAT treatment applicable to trade with the United Kingdom has changed substantially. Many changes are taking place and have a significant impact on Belgian companies.

In this article, we provide you with a brief overview of some of the Brexit results with regards to VAT:

1. Supplies of goods between taxable persons

As the UK is now outside the VAT territory, shipments of goods between taxable persons (B2B) from an EU Member State to the UK or vice versa are no longer considered as intra-Community transactions exempt from VAT in the Member State of departure or as intra-Community acquisitions of goods taxable in the country of destination of the goods.

These transactions are now exports – exempt from VAT in the Member State of departure – or imports taxable on arrival under the VAT provisions applicable in that territory.

This change implies inter alia that:

• The legal provision relating to the export is mentioned on the invoice (i.e. Article 146 of the VAT Directive or Article 39 §1 or §2 of the Belgian VAT Code);
• The entry into or exit of goods from the territory of the European Union is proven by a set of documents and, in particular, by the customs declaration (on which the exporter of the goods will mention its EORI number) as well as other documents such as transport documents;
• The modification of the reporting of these operations in the VAT declaration: in box [47] (outgoing transactions) and in boxes [87], [56] and [59] (incoming transactions);
• The absence of reporting in the statement of intra-Community transactions.

2. B2B services

B2B services with the United Kingdom are now considered “extra-Community” services, not intra-Community services.

This change implies, among other things, that:

• These services must therefore be reported in the VAT return: in box [47] (outgoing transactions) and in boxes [87], [56] and [59] (incoming transactions);
• They will no longer be reported in the statement of intra-Community transactions.

3. The special feature of Northern Ireland

Within the framework of the “Protocol on Ireland and Northern Ireland”, it is provided – for VAT purposes – that Northern Ireland continues to be part of the “European Community”, as far as goods are concerned. The shipment of goods between the Member States and Northern Ireland will continue to benefit from the intra-Community regime.

However, for services, Northern Ireland will be treated as a third territory, in the same way as the rest of the United Kingdom.

4. Sending goods to private individuals in the United Kingdom

The “distance selling scheme” no longer applies to businesses selling goods to individuals in the UK. These sales are now considered as an export. Depending on the terms of the sale, the seller may be required to be VAT registered in the UK.

5. The Mini One Stop Shop system in B2C transactions

The MOSS scheme is no longer an option for supplies of electronic, telecommunications, radio and television services made by a Belgian taxable person for a particular customer established in the UK. In the event that UK VAT is due on the transaction, the Belgian supplier must refer to the VAT rules in force in the UK.

6. The refund of UK VAT

UK VAT incurred by an EU taxable person during the calendar year 2020 will continue to be eligible for refund under the VAT Refund procedure until 31 March 2021 at the latest.

For UK VAT incurred from 1 January 2021 onwards, the EU taxable person will have to follow the refund procedure prescribed by the UK VAT Authorities.

7. Financial or insurance services

Belgian taxable persons who carry out financial or insurance transactions as referred to in Article 44 §3, 4° to 10° of the Belgian VAT Code for customers established in the United Kingdom may benefit from a more interesting right of VAT deduction, as the charges relating to these transactions may be deductible pursuant to Article 45 §1, 4° and 5° of the VAT Code.

8. Conclusion

Brexit, as we might expect, imposes new VAT obligations or, at least, imposes special attention in order to comply with the VAT obligations related to the UK’s third country status. While, from a Belgian point of view, the Belgian VAT Authorities have published a relatively comprehensive set of comments, the potential new VAT obligations in the United Kingdom should not be overlooked.

A forthcoming article will be published on the question of VAT registration in Belgium or in the United Kingdom, taking into account the obligation (or not) to appoint a responsible representative.

Tax Consult in collaboration with the correspondents of its network in the United Kingdom is at your disposal for any question in this context.

For more details on these provisions, we invite you to read the FAQs published by the FPS Finance or to contact the VAT Department of Tax Consult at info@taxconsult.be. An appropriate answer to your situation will be sent to you.

The VAT Department of Tax Consult A&A

A recent circular from the tax authorities (Circular 2021/C/2 of January 7, 2021) aims at clarifying the provisions of Article 8 of the Inheritance Tax Code, in particular following the various legislative changes in matrimonial and inheritance law.

It results from the analysis of this circular that the preferential regime following which the holders of a life insurance policy benefited within the framework of a horizontal estate planning is now over.

I. TARGETED SITUATIONS

This circular mainly impacts situations where a married couple under the legal regime of community of property subscribed to a life insurance together, of which they are also the insured heads, and their common children the beneficiaries.

II. PREVIOUS REGIME

Previously, when spouses invested in life insurance, and in the event of the death of one of them, no inheritance tax was applied on the transfer of the cash surrender value of the policy from the deceased spouse to the surviving spouse.

Indeed, the Civil Code provides that the cash surrender value of the life insurance contract is considered the personal property of the surviving spouse. From a tax point of view, following this surrender, the surviving spouse is required to pay a reward to the estate assets. However, according to article 16 of the Inheritance Tax Code, this reward is exempt from inheritance tax.

III. REGIME ESTABLISHED BY THE NEW CIRCULAR

Through this circular, the tax authorities seek to clarify the scope of application of Article 8 of the Inheritance Tax Code. Indeed, the Administration stipulates that any sum received by the surviving spouse resulting from the conclusion of a life insurance policy under a stipulation made in his / her profit is considered as being collected as a legacy by this spouse, notwithstanding the that the surrender value is qualified by the Civil Code as belonging to the surviving spouse.

On this basis, the Administration therefore tends to consider that the surrender value is not transmitted via the prescription of the Civil Code but via a legacy within the meaning of Article 8 of the Code of Inheritance Rights. Inheritance tax would therefore be due on these amounts.

It should however be recalled that a circular does not bear the force of law and its purpose is in principle only to clarify the position of the Administration. The application of this circular could lead to numerous disputes between taxpayers and the Administration based on the violation of the principle of legality of tax.

Tax Consult follows the news of the new measures taken and applied by the Authorities on a daily basis and is regularly in contact with the (tax) Administration. In case of question, do not hesitate to contact our team at info@taxconsult.be or directly your file manager in order to receive a tailor-made advice adapted to your situation.

Tax Consult A&A

Since their apparition a couple of years ago, the crypto-currencies (Bitcoin, Ethereum and some 2000 others) were recently the subject of conversations. These high-volatility products can lead to material capital gains, which raises the question of their tax treatment.

As it is the case for capital gains on shares, the Belgian tax administration distinguishes three different tax qualifications to the capital gains realized at the occasion of the sale of crypto-currencies:

• The capital gains are realized in the framework of the normal management of one’s private estate (good father’s management);
• The capital gains result from speculative operations; and
• The capital gains take place in the framework of a professional activity.

In case the capital gains are realized in the framework of the normal management of one’s private estate, i.e. with the objective of making one’s money grow on the long-term in a secure way, it should in principle not be taxed.

If the capital gains result from speculative transactions, i.e. when the tax payer is fully aware of the risky nature of the transactions, the capital gains is qualified as a miscellaneous income and is subject to a distinct 33% tax rate. Other criteria are relevant to qualify the capital gains as miscellaneous income, such as the use of credit, the small periods of time between the transactions, the regular monitoring of the exchange rates in order to sell at the higher rate possible, etc.

Finally, in case the transactions are performed with such a regularity that one can suspect that the transactions take place within the framework of a professional activity (i.e. the trader in crypto-currencies), the capital gains realized are qualified as a professional income and are taxed as such at the progressive income tax rates.

We can easily understand that capital gains realized in the framework of crypto-currencies transactions are analysed based on the factual background around the transactions. Faced with the raise of crypto-currencies transactions the Anticipated Decisions Services published a list of questions with the aim of helping the tax payer determining in which category he / she lies. This list is available on the website ruling.be.

Tax Consult follows the new measures taken and applied by the Authorities on a daily basis and is regularly in contact with the (tax) Administration. In case of question, do not hesitate to contact our team at info@taxconsult.be or directly your file manager in order to receive a tailor-made advice adapted to your situation.

Tax Consult A&A

Since the adoption of the law relating to money laundering and terrorism financing prevention dated September 18^th, 2017, every company, non-profit (international) organization, foundation and trust must identify and register its beneficial owners via the platform known as the “UBO Register”, and this since September 30^th, 2019 (administrative tolerance until December 31^st, 2019).

Following the recent publication of a Royal Decree, a new documentation obligation was added to the existing one. Indeed, the Royal Decree in question provides that all information providers are now required to provide via the platform any piece of document demonstrating that the information recorded is “adequate, accurate and up to date”.

This documentation formality must be complied with by April 30^th, 2021 at the latest. An administrative fine of EUR 250 to EUR 50,000 may be applied to the directors of the concerned companies, non-profit (international) organizations, foundations or trusts in the event of non-compliance with their disclosure obligation but also in the event of poor quality of the data disclosed.

As a reminder, we would also like to point out that any change of beneficial owner must be reported in the “UBO Register” within one month of such change.

Tax Consult follows the news of the new measures taken and applied by the Authorities on a daily basis and is regularly in contact with the (tax) Administration. In case of question, do not hesitate to contact directly your file manager or our team using the address info@taxconsult.be in order to receive a tailor-made advice adapted to your situation.

Tax Consult A & A