The Belgian VAT penalty system is notorious for the severe administrative fines it imposes on taxpayers for late or small errors in VAT submissions.
This includes Intrastat and ESL filings as well as VAT returns: non-compliant taxpayers can be required to pay a hefty lump sum fine, as well as late payment interest of 0.8% per month for underpayment of VAT.
Recently, the Belgian tax authorities released new guidelines relating to taxpayers’ penalty waiver applications in respect of these fines. This policy change applies to waiver requests for penalties levied since 1st January 2018.
Although taxpayers have been able to apply for a waiver or reduction of these sanctions, until now there have been no guidelines for tax officials to follow when assessing the merit of these applications which has led to a lack of consistency.
Under the revised penalty regime, tax authorities will continue to impose these penalties, but are generally obliged to accept a taxpayer’s penalty waiver request provided that each of the following conditions are satisfied:
- The infringement is the first of this nature within a four-year period;
- The infringement was made in good faith;
- At the time of submitting the request, the taxpayer is up-to-date with all its Belgian VAT compliance obligations; and
- The infringement does not affect the amount of VAT due.
If the infringement is the second of its nature within the four-year period, the applicable penalty will be reduced by 2%.
Penalties levied for omitted VAT returns must still be paid.