From January 1, 2025, the VAT exemption scheme for small businesses in Belgium will be significantly expanded. This new regulation, introduced on the basis of a European directive, offers opportunities for Belgian and foreign entrepreneurs. Here we discuss what will change and what entrepreneurs need to know to prepare.
Current small business exemption scheme
Currently, Belgian companies with an annual turnover of up to €25,000 can opt for the VAT exemption scheme. This means no VAT charge on outgoing invoices and no periodic VAT returns. In return, however, they cannot recover VAT on expenses incurred. Certain sectors, such as catering or real estate work, are excluded from this scheme. Specific activities, such as the rental of furnished accommodation, are also not eligible.
What will change in 2025?
From 2025, Belgian companies will be able to apply the VAT exemption scheme in other EU countries. This allows small Belgian companies with cross-border activities to get started without foreign VAT registration or declarations. Conversely, foreign companies that meet the turnover requirements can also use this scheme for their activities in Belgium.
Double turnover threshold
To apply the scheme in other EU countries, two thresholds apply:
- EU turnover threshold of €100,000: Only companies with a total EU turnover of up to €100,000 are eligible.
- National threshold: Each country sets its own turnover threshold (in Belgium €25,000).
Non-EU companies cannot take advantage of this scheme and are subject to VAT from their first sale in the EU.
Application of the exemption scheme in another EU member state
Belgian companies wishing to apply the scheme in another EU country must make a prior notification to the Belgian VAT Administration. After approval, the company will receive a VAT number with the suffix "EX". This process includes:
- An electronic notification with the company identity and turnover data (in Belgium and other EU countries).
- A quarterly report of Belgian and EU sales, including nil sales if there were no revenues.
- A notification within 15 days when the EU turnover threshold is exceeded.
Foreign companies and exemption regime in Belgium
European companies wishing to use the exemption scheme in Belgium must meet both the €100,000 EU threshold and the €25,000 Belgian threshold. After notifying their home member state, they will receive a VAT number with the suffix "EX". Thanks to this scheme, foreign companies do not have to apply for a Belgian VAT number or submit periodic VAT returns in Belgium.
Belgian companies without cross-border activities
Belgian companies operating only in Belgium and making use of the VAT exemption scheme do not have to take any additional steps. However, they do have to report their annual turnover, even if they have zero turnover, before March 31 of the following year.
What does this mean for you as an entrepreneur?
The extension of the VAT exemption scheme offers new opportunities for Belgian and foreign entrepreneurs, provided they meet the right conditions and report on time. The double turnover threshold and mandatory quarterly reports require accurate administration. The Belgian VAT Administration is expected to provide more clarifications soon.
Keep an eye on developments to take full advantage of the benefits this expansion offers your business.
