Take action before 31/12/2022
Until recently, the reduced rate of 6% applied to admission to fitness centers. Any form of additional individual counseling, group counseling and group classes were subject to the 21% VAT rate. This distinction was recently challenged before the European Court of Justice, forcing the Belgian VAT Administration to revise its position. So from now on, this means a more extensive application of the reduced rate of 6%, but for many operators also the possibility to reclaim the difference of 15% VAT over the period from 2019 to now. We give you advance information on what steps you need to take to do this.
Which VAT rate should I apply now?
In accordance with the European Court of Justice ruling, the reduced VAT rate of 6% will now apply if:
- The sports facility offers to its customers personal coaching and/or group classes atop granting access to the facility;
- Customers also have the right to access the facility outside The times when personal counseling and/or group classes are offered;
- The customers at those times independently (i.e. without personal supervision and outside of group classes) can use the sports facility.
However, if the customer pays for access to the fitness with personal guidance and/or group classes, without further self(standing) use of the fitness, the reduced VAT rate will not apply.
Personal training is also now subject to the reduced rate of 6%. However, an important distinction should be made here. If the personal trainer is on the payroll of a fitness club or has his own accommodation at his disposal where he conducts training sessions, then the aforementioned ruling applies to him. On the other hand, if the personal trainer comes into a particular fitness club with his own clients only to provide guidance there without a use or rental agreement, then this personal trainer does not confer the right to access the sports facility. The clients then pay him only for teaching and not for the use / right to access the sports facility. In these latter situations, therefore, the 21% VAT rate will apply.
From when can I start applying reduced rates?
So if you run a fitness center, you can start applying the reduced VAT rate from 8/12 (being the date of the VAT Administration's decision). Today, however, it is a matter of conjecture how strictly the Administration will rule on these conditions. Rumor has it that a circular letter with additional clarification is being prepared. But when this will be made public and how detailed this clarification will be is as yet unclear. It therefore remains possible that the Administration will still collect additional VAT, increased by fines and interest on late payments, if it considers that not all the specific conditions have been met.
How should I go about recovering the overpaid VAT?
You can start reclaiming 15% of the overpaid VAT for calendar year 2019 until now.
Are you a quarterly submitter, then you can claim the refund request in the VAT return for the fourth quarter of 2022 (to be filed by 20/01/2023). Here you include the amount of the refund in schedule 62 and address an express letter to the local VAT control office requesting a refund, and this no later than 31/12/2022.
Are you month submitter, then you can include the VAT refund in the VAT return for the month of November (if you have not already filed it). Or if already submitted, you can also include it in grid 62 of the VAT return for the month of December (to be submitted no later than 20/01/2023) and Address an explicit letter to the local VAT control office before 31/12/2022.
Should I refund this 15% VAT to the customer?
If you have sold a fitness subscription to your private customer, the position here is that this subscription price was communicated inclusive of VAT. You do not then have to issue a credit note or refund the excess VAT charged to your customer.
If, on the other hand, it concerns a B2B situation, it is not yet clear what the consequences will be. We are still waiting to hear from the VAT authorities. A credit note will probably have to be issued and the excess VAT charged will have to be refunded.
Take action before 31/12/2022
What steps should you take before year-end?
- Check whether you can take advantage of these amended VAT regulations;
- Calculate any regularizations for calendar year 2019 and beyond;
- Contact the local VAT control office before 31/12/2022 regarding your refund request;
- Include the amount of the refund in schedule 62 of the VAT return you file by 20/01/2023.
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