The Belgian tax authorities are sending out letters to United Kingdom (UK) companies currently directly registered for VAT in Belgium, advising them that from the date that Brexit comes into effect, their Belgian direct VAT-registrations will no longer be valid.
The note urges them to take pre-Brexit action by adopting a VAT fiscal representative as soon as possible and outlines what this procedure entails.
After Brexit, the UK will no longer be part of the European Union (EU) bloc. Instead the UK will have third country status meaning that the rules applicable to the EU VAT area will no longer be relevant to UK businesses. Consequently, UK companies will have to observe the VAT obligations which are required of all businesses established outside of the European Union.
At present, because UK businesses are considered as EU-established, they can register for VAT directly with the Belgian tax authorities and manage their own Belgian VAT responsibilities. But, from the date that Brexit comes into effect, UK businesses will have to be VAT-registered in Belgium via a fiscal representative. This is also likely to be the the case in many other EU Member States
This fiscal representative will be responsible for carrying out the UK business’ Belgian VAT compliance obligations on its behalf and be held jointly liable for any liabilities due to the tax authorities. Generally, with an indirect VAT registration such as this, there is a requirement for the business to provide a guarantee. A suitable amount is being decided upon by the tax authorities now.
UK businesses are advised to start the process of appointing a fiscal representative as soon as possible and ideally, prior to Brexit since the approval procedure can easily take longer than one month to finalise.
Those currently in possession of a valid VAT registration number will be able to keep it after their switch to an indirect VAT registration.
If you are impacted by the above development or would like further advice on your Brexit strategy, please do contact us for a chat.