The Belgian Minister of Finance unfolded his plans for the upcoming year in his policy note dated 28 October 2016.

No real surprises in the field of indirect taxes where the policy note mostly refers to general concepts such as the harmonization of the VAT rate structure and the elimination of competition distortions.

One noteworthy action plan for VAT is however that the option to tax B2B immovable lease will seriously be examined. In neighboring countries such as the Netherlands and Luxembourg where similar regimes already exist, the taxation of B2B immovable lease proves to be generally favorable for both the lessor and the lessee. Under such a regime, the lessor would under certain conditions have the option to tax the rent of immovable property to VAT taxable persons, which entitles him to recover the VAT on the acquisition or construction of the property.

Nowadays, these VAT costs are usually charged on via the rent (or by means of a specific VAT compensation charged on top of the rent) as these costs are not recoverable otherwise. This on-charging of VAT costs would not be necessary if a VAT taxed immovable lease scheme would be adopted, which thus could result in a lower rent for the lessee.

The policy note indicates that it envisages a system similar to the Dutch system. In the Netherlands, it is possible for the lessor and the lessee to jointly opt for a VAT taxed lease if the lessee uses the property for activities which give right to deduct 90% or more of VAT on costs. Consequently, a lessee who performs mostly VAT exempt activities like a bank or an insurance company cannot opt for a VAT taxed immovable lease. Under the Dutch regime, the option for a VAT taxed lease cannot be ‘waived’ or (re-)implemented at will by the parties, but rather it is a one-time choice of both parties for the remainder of the lease.

The policy note does not contain any surprising action plans for Customs, where most of the projects are embedded in the European wide adoption of the new Union Customs Code.

For completeness’ sake, please find herewith a summary of the most significant indirect tax projects that were proposed in the policy note.

I. VAT

  • Harmonization of the VAT rate structure and VAT procedures;
  • Simplification of administrative measures, with as highlight the abolition of the monthly advance payments for taxable persons who file quarterly VAT returns;
  • A VAT penalty and late payment interest reform, in which the main focus will lie on the good faith of the taxable person;
  • An opt-out option on the current VAT exemption for immovable lease in B2B relations in order to tax such B2B leases will be examined (based on the Dutch model);
  • Broadening of the scope of application of the VAT exemption for social housing;
  • Further enhancing of VAT legislation in order to eliminate competition distortions.

II. Customs & excises

  • Further to the introduction of the new Union Customs Code (UCC) since 1 May 2016, new and simplified customs procedures and systems will be deployed (such as Project Customs Decisions, Project Registered Export System, etc.);
  • Project TerugRem: this project aims at postponing the electronical data entry of the duties and taxes due so that the less burdensome administrative refund procedure could be applied (prior to data entry) instead of the more burdensome statutory procedure (post data entry);
  • Customs Container Release Management (CCRM): further development and usage of the IT system that informs the terminal operator and the taxable person automatically that the relevant container was released;
  • An electronic platform will be introduced for managing electronic excise stamps for tobacco products;
  • Excise fraud taking place in domestic customs warehouses will be combatted.