Belgian VAT exemption for transport services connected with exports update
VAT exemption for transport services linked to imports and exports is subject to a new condition from September 2022.
## Update August 2022: The exemption on transport services connected with exports is suspended until further notice. See circular 2022/c/72. ##
Belgian authorities have introduced a new condition to apply the VAT exemption for transport services linked to the export of goods, narrowing down the transactions where such exemption can be used. Following this update, the referred VAT exemption could only apply when the transport services are invoiced either to the sender or the receiver of the goods to be exported. This is explained in Circular 2021/C/96 from the Belgium authorities.
The VAT exemption for transport services connected with exports can only be applied on contracts where one of the parties is either the sender or the receiver of the goods.
As clearly stated on the official Circular “if the service provider uses a subcontractor, the relationship between the subcontractor and the service provider cannot be subject to the exemption provided for in Article 146( 1)(e) of Directive 2006/112/EC”.
Once the change has entered into force, VAT exemption will only apply on contracts for transport services connected with export when either the sender or the receiver of the goods is one of the parties involved. These persons can be:
- Seller or buyer of the goods to be exported.
- Owner, lessee, or borrower of the goods to be exported.
- A worker who exports goods outside the EU in order to have them repaired, transformed, processed, or adapted.
- The person re-exporting goods outside the EU previously received on trial or consignment.
- The person who re-exports goods outside the EU after being repaired, processed, processed, or adapted.
What are the consequences of the change?
This new condition leaves outside the VAT exemption invoices issued by subcontractors, among others, for the transport services related to these types of goods to be exported.
For example, Company A in Belgium plans to export goods to Company B in India; to do so, Company A asks for transport services to Supplier X – Belgium established; on its side, Supplier X subcontracts transport services from Supplier Y – also Belgium established. The latter contract between Supplier X and Supplier Y will not be subject to VAT exemption once the proposal from Belgium authorities enters into force.
The motivation for this change in the VAT exemption on transport services connected with exports – from Article 146(1)(e) of Council Directive 2006/112/EC, is found in the decision on ECJ case C-288/16 29.06.2017.
The new measure has been postponed several times, being the most recent to September 2022. These postponements are explained to allow operators to adapt to the scope limitation of the mentioned VAT exemption. We must wait for its final implementation though to understand the full extent as well any further clarifications issued by the tax authorities.