Usually, VAT is payable by the supplier of services or the seller of goods. However, the European directive allows EU Member States, for domestic transactions carried out on their territories, to make the customer liable for VAT by applying the reverse charge mechanism.
Belgium has opted to apply this mechanism to the construction sector in order to combat tax evasion.
The benefits covered by this mechanism are:
- Supply and fixing in a building of elements of an installation: of central heating, air conditioning, sanitary, electric, of electronic bell, of fire detection, of internal telephony or of protection against thefts;
- Supply and fixing in the kitchen or the bathroom of a building of cupboards of arrangements, sinks, washbasins, hoods, ventilators and aerators;
- Supply and fixing of shutters and blinds placed outside a building;
- Supply and placement in a building of cladding on the wall or floor whether fixed to the building or whether the placement requires only a simple cutting on site to the necessary dimensions;
- Repair, maintenance and cleaning of a building.
Until January1, 2023, the reverse charge mechanism applied when the service provider was established in Belgium and the customer was :
- Or a taxable person established in Belgium;
- Or a taxable person not established in Belgium but who has had a responsible representative approved in Belgium.
Since January 1, 2023, this mechanism also applies to customers who are taxable persons not established in Belgium but who are registered for VAT in Belgium in order to file Belgian VAT returns.
What are the consequences for you : You are a foreign company registered for VAT in Belgium and you call upon a service provider in Belgium ? Your service provider should no longer charge you VAT for its services. You must directly self-assess (collect and deduct simultaneously) the VAT on your Belgian VAT return.