Tax registration is essential for all businesses operating within the Belgium territory. During incorporation, business owners must register with specific tax bodies and pay a certain amount charged as annual tax. Value Added Tax is charged on specific goods and services offered by corporations. It must be paid timely, and all annual reports filed correctly. Failure to do this attract financial penalties. For corporations owned by foreigners based outside the nation, fiscal representatives are required to handle tax operations on behalf of the business.
If you are interested in setting up a business in this country, learning about its tax policies is very important. This guide provides information on Value Added Tax, and how to register among others.
VAT Eligibility
Companies that store their goods in the country are required to register and pay this tax. This is common in almost all parts of Europe. Businesses involved in the importation of goods into the country must register for the tax as well as reclaim import VAT. Those who buy and sell their products to non-vat registered consumers are required to pay taxes too. A company that holds live exhibitions, events, or training here and those who do self-supply of goods are eligible for VAT registration.
Types of VAT
Countries in the EU apply a standard value-added tax rate above 15 percent and the same for the supply of goods and services. They can choose to apply either one or two reduced rates of at least 5 percent only to supplies of specific listed goods and services. A 21 percent standard rate applies to all other taxable goods or services, and a 12 percent reduced tax rate is charged on certain foodstuffs, some agricultural supplies, specific construction work, and some energy products such as coke, lignite, etc. The 6 percent reduced rate applies to foodstuffs, soft drinks, water supplies, pharmaceutical products, etc. While some daily and weekly newspapers, specific recycled materials, by-products, etc. attract zero tax rate.
Processing Time
It takes at least a month to acquire a VAT number after submitting the necessary documents.
Documents Required
To successfully register your company for tax, you must submit the following required documents:
- Completed VAT registration form(s)
- Articles of Association copies
- Extract from the trade register
- VAT liability certificate, etc.
VAT Penalties
Fines are levied on corporations who fail to comply with tax authorities to register for this tax on time, for late fillings and wrong declarations. These fines range from at least EUR 250 and 10 percent of any late payment and registration to EUR 5000 an invoice for consistent failure to provide an invoice. When VAT is paid late or unpaid, companies are subject to interest, at a fixed rate of 0.8 percent a month.
VAT Credits
This is the surplus left at the tax office when purchase VAT surpasses sales VAT owed. Usually, credits are carried forward to the following VAT return and claimed against the next period’s sales. However, you can choose to request for the credit to be refunded, once a quarter.
Hiring A Fiscal Representative
There is a need for non-EU companies to hire a fiscal representative to carry out their taxable operations in the country on its behalf. Such a representative is jointly and severally liable for the VAT owed by the foreign business. This implies that when the company fails to pay tax on time, debts can be recovered from the fiscal representative. Despite not being an EU member state, companies owned by the British do not need a fiscal representative to operate.
