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Belgium reduced VAT rate consolidation shelved

Collapse of tax reform talks means shelving of consolidation of 6% and 12% reduced rates to new 9% rate

The collapse on agreement for a major Belgian tax reforms means that the 2024 plan to simplify reduced VAT rates will be dropped (see original plans below). This delay may also affect the scheduled July 2024 Belgian e-invoicing launch.

The reforms had envisaged a major shift of the tax burden away from income to wealth. But opposition parties doubted the government’s estimates on the like new revenues and the risk of a shortfall.

Failure to agree on the tax plan means any fresh attempt to consolidate the rates will not come until after the 2024 summer elections.

July 2022 – Belgian 6% and 12% reduced VAT rates to be consolidated into new 9% rate

The Belgian Finance Ministry had announced plans to combine the existing 6% and 12% reduced VAT rates into a new 9% rate. The standard VAT rate of 21% would be unchanged.

The implementation date was expected to be January 2024.

The consolidation would effectively mean a net tax rise since there are many more supplies at the 6% rate, including:

  • entrance to cultural events, amusement parks and similar
  • Books
  • Buildings
  • Certain foodstuffs
  • Hotel accommodation
  • Rail, road passenger transport
  • Water supplies

The Ministry also wants to permanently cut VAT on electricity, which was recently reduced to help combat the inflationary effects of energy price rises. It will also include housing demolitions and rebuilds in the new 12% rate. Many products will be recategorised under the zero VAT rate, including: fruit and vegetables; medicine; personal hygiene supplies; and public transport.

The changes was announced as part of a raft to tax reductions and simplifications, now stalled, including:

  • Rise in personal income tax thresholds
  • Cut in the corporate income tax rate on small businesses
  • Introducing the global minimum tax on multinationals as part of the Pillar 2 OECD tax reforms

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The EU introduced new reduced EU VAT rate setting freedoms on 6th April 2022 which allows member states to use a reduced VAT rate below 5% for the first time on a controlled ranges of goods and services. Plus, extended the categories of supplies eligible for the other two reduced rates permitted below their standard rate.



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