Last update: 25 January 2013 - 17:00 CET
Overview of indirect tax measures in the Budget 2012 agreement
In the Law of 28 December 2011 (Dutch | French) the submission to VAT is confirmed for bailiffs and notaries while lawyers continue to be VAT exempt. The VAT Administration also published a first guideline (Dutch | French) commenting on some topics on the application of the new regulation.
This measure entered into force on 1 January 2012. This however entailed a very short delay for registering and preparing these professions for VAT. Therefore, the administrative guideline provides for a transitional regime whereby no VAT is to be paid to the VAT authorities until May or July 2012.
The Law of 28 December 2011 (Dutch | French) also changes the provision governing the revision of previously recovered VAT (so-called ‘VAT revision’). According to the Explanatory Memorandum, this change aims to extend the scope of the VAT revision rules to be implemented by Royal Decree and aims to cover the situation whereby the VAT position of a taxable person changes ‘due to the abolition of a VAT exemption’. Therefore, this provision clearly aims to cover the VAT revision in the hands of notaries and bailiffs. This measure is executed by the Royal Decree of 9 January 2012 (Dutch | French), introducing a new art. 21bis in the Royal Decree n° 3 of the VAT Code governing the recovery and revision of VAT. The new provision stipulates that any VAT to be revised due to the change of the VAT regime, cannot be claimed back but can only be off-set against the VAT payable on the realised turnover.
It is to be pointed out that an appeal has been lodged with the Constitutional Court to declare the new VAT regime for notaries null and void as it would infringe upon the Constitution.
The VAT rate on digital TV increased from 12% to 21%, i.e. the same VAT rate as previously applicable for analogue TV. In previous years, this measure has already been announced several times within the framework of budget negotiations and has now become effective. This measure entered into force on 1 January 2012.
The Law of 28 December 2011 (Dutch | French) also changes the provision related to the cases wherein a revision of VAT can be made. Aside from the change aimed to cover notaries and bailiffs (see above), the new provision also excludes a VAT revision when a person ‘becomes’ a taxable person. This change in the text is not explained in the Explanatory Memorandum, but probably aims to confirm in the legislation that a taxable person cannot recapture part of the VAT incurred the moment whereby he did not yet have the capacity of a VAT taxable person (e.g. a private person starting a business or a public authority starting activities subject to VAT).
Further to the 2012 budget control, the Government has reviewed the VAT penalty system to increase its dissuasive character.
The Program Law which of 22 June 2012 doubled the principal fixed VAT penalties from €25 - €2,500 to €50 - €5,000. On 17 July 2012, the Government published a Royal Decree implementing this new provision (Dutch | French). The increased penalties apply to infringements committed as of 1 July 2012.
The Royal Decree determines the fixed penalties applicable with infringements on formal VAT requirements (e.g. non-filing or late filing of VAT returns and listings, non-issue or late issuing of invoices or other ‘documents’, incorrect invoice wording, infringements on the VAT bookkeeping kept, etc.). This Royal Decree replaces the former Royal Decree n°44.
The main features of this Royal Decree are:
The VAT Administration has also published a notification (Dutch | French) that the former ‘administrative reduced penalties’ are no longer applicable as from 1 July 2012, meaning that in practice a first infringement will in principle also give rise to a penalty.
A second Royal Decree (Dutch | French) has also been published, increasing from 10% to 15% the proportional penalty for the non-payment of VAT due and declared in a VAT return, or in cases where a ‘special account’ is created (‘bijzondere rekening’ – ‘compte spécial’). The other proportional penalties remain unchanged.
The Council of Ministers has decided on a series of economic growth measures, one of which is the abolishment of the deposit for the license to defer import VAT to the VAT return (so-called ET. 14.000 license).
Currently, companies importing goods in Belgium can choose between two methods for paying the import VAT due:
The second method is often used by importing companies in order to prevent cash flow and pre-financing, whereby the import VAT due is reported as payable and as deductible in the same VAT return.
Until now, compared to several other countries (The Netherlands in particular); a disadvantage with the Belgian regulation was the fact that companies needed to make a deposit in order to obtain an import VAT deferral license (so-called E.T. 14.000 license) . This deposit equaled 1/24th of import VAT due from the previous year. In addition, the warranty had to be adjusted at the beginning of each calendar year based on the actual import VAT reported during the previous calendar year.
The Belgian Government has now decided to abolish this warranty payment. By doing so, the Government aims to support import traffic through Belgian harbours.
No timing details are announced yet with respect to the warranty’s abolishment.
We refer to the Economic Stimulus Plan website for the latest changes with respect to the abolishment of the warranty.
At the same time as the warranty’s abolishment, it has been announced that the import VAT deferral license would be extended to ‘global’ VAT representatives.
‘Global’ VAT representatives dispose of a special VAT number (starting with BE 796.5 or BE 796.6) allowing them to simultaneously represent several non-resident companies carrying out operations in Belgium. The regime can only be applied in certain types of transactions (e.g. imports followed by a subsequent intra-community supply).
Until now, these global representatives were not allowed to request such a license, implying that where VAT was due on the imports, this VAT has to be paid in cash upon customs clearance. In order to further support activities in Belgian harbours, this license will now be extended to this specific regime.
The delay for submitting inheritance tax returns is now 1 month shorter (i.e. 4, 5 and 6 months instead of 5, 6 and 7 months).
The excise duties on tobacco increases. There is an increase of €0.3 per pack of cigarettes and €0.2 for rolling tobacco. In addition, the special excise tax for manufactured d tobacco is increased to €9.5/kg. The increases were applied from 1 January 2012.
The excise duties on rolled tobacco were further increased with 1.5 €/kg (to 11 €/kg). The excise duties on cigarettes will be increased with 0.13% and with €0.32 per 1,000 pieces. The delay for the payment of duties on tobacco is 1 week shorter in 2012.
The maximum tax amounts per transaction is increased from €500 to €650 (standard) and from €750 to €975 (capitalisation anti trust)
The stock exchange tax has been further increased for transactions executed in the period from 1 May 2012 until 31 December 2014:
The 0.09% rate remains unchanged. The maximum tax amounts per transactions are increased from €650 to €740 (standard) and from €975 to €1,500 (capitalisation unit trust).
A measure that had to be decided in the budgetary discussions for 2012 was the revamping of the bank levy. This was initially not foreseen as a budget measure but aimed to provide a new legal basis for the existing bank levy after it was annulled by the Constitutional Court.
In the wake of the 2008 financial crisis, a bank levy was introduced by the Law of 15 October 2008. The bank levy serves to finance the Deposit Guarantee Fund (“Bijzonder Beschermingsfonds voor Deposito’s en Levensverzekeringen”, “Fonds Spécial de Protection des Dépôts et des Assurances sur la Vie”), which provides a cover for those who hold deposits and policies of up to €100,000 since 2008. In reaction to the division of Dexia (Royal Decree dated 10 October 2011), the fund was recently extended to include a cover for the capital inlay in recognised cooperative companies.
Under the bank levy legislation, all financial institutions participating in the deposit guarantee fund are liable for an annual contribution equal to 0.15% of the qualifying deposits amount held (at 30 September of the previous year) or 0.15% of the inventory reserve for life insurances.
The bank levy’s mechanism was contested by several smaller Belgian banks because of the disproportionate effect it has on banks mainly financed through client deposits, as opposed to banks financed on the capital markets, which in practice, favors larger institutions. This discussion was brought before the Constitutional Court which, on 23 June 2011, decided that the bank levy discriminates against credit institutions which mainly source their financing through retail client deposits, as it does not take financial institutions’ risk profile into account in any way. Due to the incompatibility with the equality principle, the legislation which set the 0.15% tax rate on credit institutions was annulled by the Constitutional Court. However, the ruling’s entry into force is delayed until 31 December 2011.
In order to secure financing for the Deposit Guarantee Fund as of 2012, legislative action was required.
The measures taken in the budget with respect to the bank levy consist of two separate levies.
Firstly, a new financial stability contribution is applied to all Belgian established banks, amounting to 3.5 base points (bps) on the total amount of liabilities minus equity and deposits subject to the guarantee scheme. This measure should raise €100 million for 2012 and is applicable in the same way to all banks.
Secondly, the contribution to the Deposit Guarantee Fund which was already applicable in previous years was revamped and is fixed for 2012, in globo, at 24.5 bps on the total amount of deposits subject to the guarantee scheme. For 2013, the rate will be reduced again to 15 bps. At the level of the individual banks, the contribution is fixed based on a weighted ratio representing the risk profile of the bank and which takes into account capital adequacy, asset quality and liquidity. The precise calculation of this weighted ratio and the range applicable is not yet known. These adjustments to the individual contributions aim to meet the criticism of the Constitutional Court.
The Law of 22 June 2012 (Dutch | French) provides for an increase of the 0.08% subscription tax on saving deposits. The increase will be function of the loan-to-deposit ratio of the banks. For 2012, the increase will be implemented by way of an exceptional levy on the deposits on 30 June 2012, so as to reach the budgeted revenue of €17 mio. This increase may be partially compensated by a decrease of the deposit contribution.
The nuclear contribution will bring €550 million to the Belgian State in 2012 (i.e. an increase of €300 million). This is the "windfall benefits" tax to be paid for the longer than foreseen exploitation of nuclear power plants in Belgium. As in previous years, the nuclear contribution will be levied directly from the different energy companies in proportion to their share of the nuclear power capacity in Belgium. A complaint from the nuclear producers with the Constitutional Court against this contribution has been denied in 2010.
The conversion of bearer securities to dematerialised or registered securities in 2012 and 2013 triggers a tax.
The taxable event is the conversion, i.e. the dematerialisation of bearer securities through deposit on a securities account with a financial institution or the registration with the issuing company as registered securities. Securities representing public sector debt (governed by the Law of 2 January 1991), with a maturity date prior to 1 January 2014, are not in scope.
The tax rate is 1% for conversions in 2012 and 2% for conversions in 2013.
The taxable base for quoted securities is the most recent quoted value before the date of deposit on a securities account or with the issuer. For non-quoted securities, the taxable base is:
If the securities are in a foreign currency, conversion to the Euro must be done based on the exchange rate on the date of deposit.
The tax has to be withheld by the financial intermediary (for conversions in dematerialised securities) or the issuer (for conversions in registered securities).