Belgian circular concerning self-billing
The Directive edited on 20 December 2001 of the Council of the European Union provides the possibility of invoices issued by the co- contractor for goods delivered or services rendered to him by the taxpayer.
On 22 December 2005 the Belgian VAT administration published an executive circular which elucidates the basic conditions, the scope and the procedure concerning self billing. Due to this circular, self- billing will be possible as from this date, for companies established in Belgium.
A. Basic conditions for self-billing
1. Advance agreement.
The first condition implies that parties have agreed in advance on applying the method of self- billing. If no transactions are excluded in this agreement, it will be considered to concern all transactions that will occur between the contracting parties.
On simple request of the VAT administration, the parties, even if they are not established in Belgium, must be able to prove the existence of such agreement.
2. Procedure of acceptance.
Every edited self- bill needs to be subjected to an explicit acceptance procedure by the supplier of the goods or services. In case no Belgian VAT needs to be mentioned on the self bill, the parties can also opt for an implicit acceptance.
An explicit acceptance document needs to be drafted within a period of two months following the month in which the transaction whereby the VAT has become reclaimable took place. This period of two months cannot be extended. If the supplier does not accept, the self- bill will be considered as not issued.
B. consequences
When both conditions and required mentions on the invoice are fulfilled the self bill will be considered as a justified invoice and the supplier has fulfilled his obligation to issue an invoice.
Important remark is that according to Belgian law an invoice will always be considered to be issued in name and on behalf of the supplier of the goods or services.
Moreover the co- contractor will be able to exercise his right of deduction based on the self bill. As mentioned above, an explicit acceptance of the supplier is a must for self billing. If the co- contractor does not possess this explicit acceptance of the supplier, his right to deduct will be rejected.
C. Additional remarks.
In principle the method of self billing cannot be used when the co- contractor is a private person towards whom it is obligated to issue an invoice, although some exceptions do exist.
Moreover it needs to be noted that the Belgian VAT administration will in certain cases dealing with self billing, as simplification, allow an additional reverse charge application where through pre- financing can be avoided. However, this will only be permitted if the conditions mentioned in this circular are respected and if the local VAT office receives a preceding notification.
D. Applicability.
This circular will be applicable as a whole in the following situations:
- For all transactions performed in Belgium irregardless of the place where the supplier of the goods or services and his co-contractor are established.
- For all transactions which take place outside the European Union and which are performed by a supplier of goods or services established in Belgium.
This circular will apply retroactively as from 1 January 2004. Read the circular.
