Belgian coalition debates VAT rate overhaul as government searches for agreement on budget deficit measures
With a €10 billion budget gap, Belgium is considering raising its standard VAT rate from 21% to 22% as part of government negotiations over measures to address the country’s budget deficit.
And or merging 6% and 12% into 9% reduced rates which has already been heavily debated over the summer. Coalition working groups with experts from all parties will now develop the disputed points, and the inner cabinet will meet again later this week.
The proposal reportedly being discussed by Prime Minister Bart De Wever’s coalition would also make a much broader change to Belgium’s VAT rate structure. The existing 6% and 12% reduced rates could be replaced by a single 9% rate, potentially accompanied by a new 0% rate for selected essential goods.
For businesses, this could therefore represent considerably more than a one percentage point increase in the headline VAT rate. Supplies currently benefiting from the 6% rate could face a three percentage point increase, while those taxed at 12% could see their rate fall.
Debate to continue in next weeks
However, no agreement has yet been reached. The VAT proposals form part of wider and difficult coalition negotiations over Belgium’s budget, with opposition to elements of the package reported within the governing parties.
For now, businesses should therefore treat the 22% and 9% rates as proposals rather than confirmed changes. Further negotiations are expected as the government seeks agreement on its budget package.
Read more in our Belgian VAT guide.
