Refund of VAT for non EU-business in Belgium: 3 years according to Court of Appeals.
Businesses not based in the European Union who incur VAT in connection with their activities in an EU country where they do not habitually supply goods/services (and so are not required to register for VAT) are nevertheless entitled to deduct that VAT.
This “deduction” is made by means of a refund from the EU country where they paid the VAT. The national legislation is based on the framework set forth in the 13th VAT-Directive (86/560/EEC).
Claimants must send an application to the national tax authorities in the EU country where they incurred the VAT.
In Belgium, the application period is on a calendar year basis and the application form must be submitted by 30 September of the following year. This means that claimants can ask a refund for VAT, incurred in 2019, until 30 September 2020. This prescription period is foreseen in a Royal Decree.
However, a company, registered in Belgium, has the right to VAT recovery when VAT becomes due on the goods or services received (i.e. at the point when the supply occurs). In practice, input VAT is recovered through the periodic VAT return. If the taxable person fails to claim the VAT deduction in the return related to the period in which the right to deduct input arose, it can still do so in the returns to follow, for up to three years. This prescription period is foreseen in the Belgian VAT-code. This means that in 2020, VAT can be deducted from invoices of 2017 if the company was already a registered taxpayer for VAT-purposes in Belgium.
The Court of Appeals in Brussels recently judged that the non- EU based VAT-taxpayer can also apply for a refund during a period up to three years following the year the right to deduct arose. More specific, the Court of Appeals is of the opinion that the prescription period for non-EU-businesses remains 3 years, since that period is foreseen in Belgium law and the specific prescription period that is foreseen in the Royal Decree is not in correspondence with the higher legislation.
We expect that the Belgium government will file the case before the Supreme Court for a final opinion, but nevertheless if clients of your law firm or practice are in the position that they could ask for additional refund of VAT, we would recommend to at least file the refund request in order to respect the prescription period of 3 years. If the refund request is rejected, we can continue with a litigation procedure, based on the judgement of the Court of Appeals.