Background
Since January 1, 2023, a new procedure has been in effect for mixed taxpayers exercising VAT deduction based on actual use. They are required to notify the VAT authorities.
For taxpayers who were already applying actual use before 2023, a transition procedure was in place, which has recently ended.
At the last minute, a circular was published, providing additional administrative clarification on the notification obligation (Circular 2023/C/63 dated June 21, 2023).
Not notifying in advance can have drastic consequences. Unlike the previous scheme (where permits could be granted retroactively), the notification must now be made in advance. Failure to comply with the notification requirement may result in the mandatory application of the general (turnover based) pro-rata for 2023, with potential financial implications.
Who is under the tax authorities' scrutiny?
Currently, the notification and additional reporting obligation apply only to mixed taxpayers who want to exercise their right to deduction based on actual use. However, the Minister of Finance has recently announced that an upcoming law will provide for an extended notification procedure. Soon, mixed VAT taxpayers using the general pro-rata and partial VAT taxpayers will also be required to register themselves.
It is expected that the inspections will target any taxpayer engaged in activities that do not generate a right to VAT deduction.
The purpose of all this is clear: the tax authorities aim to conduct more thorough inspections of all VAT taxpayers who, due to their status, have only limited entitlement to VAT deduction.
How can we assist?
How can we assist?
If you have doubts about your deduction methods or wish to benchmark them, VAT Consult can help assess your VAT deduction position.
Source: Opbrengst van de fiscale controleurs | News.belgium