Around the globe, businesses are hit by the Corona (COVID-19) pandemic outbreak. Tax authorities are coming with various tax measures in order to support companies in these challenging times. Besides these measures, there are also other in-house opportunities available, which could help to further improve the company’s financial position.
Supporting measures from the tax authorities
During the last couple of days and weeks, authorities across the globe introduced several VAT measures to provide instant stimulus to businesses and consumers suffering from the Corona outbreak.
These measures include payment reliefs, penalty waivers, filing delays, delaying legislative changes, VAT rate cuts, targeted support to specific industries, etc.
To mitigate the corona impact, the Belgian authorities announced specific VAT support measures, including:
- Postponement of the deadline to submit Belgian VAT returns, intra-Community sales listings and annual sales listings
- VAT return and intra-Community sales listing of February 2020: deadline extended until 6 April 2020
- VAT return and intra-Community sales listing of March 2020 / Q1 2020: deadline extended until 7 May 2020
- Annual sales listing of 2019: deadline extended until 30 April 2020
In case you are in the possession of a monthly refund license and you would like to apply for the monthly refund, then the deadline is extended only until the 24th of the month following the reporting period (i.e. February 2020 should be submitted by 24 March 2020).
- Payment of the VAT has been delayed with 2 months, without the application of penalties or interests
- VAT return of February 2020: payment deadline extended until 20 May 2020
- VAT return of March 2020 / Q1 2020: payment deadline extended until 20 June 2020
Measures upon request
In addition to these VAT measures, the Belgian authorities also introduced the possibility to request the following financial aid:
- application for VAT payment deferral/payment plans,
- cancelation of late payment interests,
- waiver of penalties for non-timely payment of VAT due.
Companies can apply for these measures until 30 June 2020, by completing and filing a formal request per debt to the Belgian authorities.
Considering that the amount of the VAT debt should be included in the application form and no filing delays are allowed, companies will have to comply with their monthly/quarterly VAT compliance obligations in due time to be able to benefit from these measures.
Similar measures can also be applied for withholding tax, corporate income tax, tax on legal entities and personal income tax in Belgium.
To conclude, the Belgian policy makers are currently also discussing a targeted (temporary) VAT rate cut for restaurant and hotel activities.
Other VAT opportunities
Last but not least, we are aware that VAT liabilities could have a significant impact on the company’s cash flow situation and might result in significant costs.
Therefore, we would like to share some opportunities which could generate significant benefits.
Please below a list containing a handful of opportunities which can be further assessed internally within your company:
- Improve Bad Debt Relief efficiencies: collect the required back-up documentation to claim bad debt relief as early as possible and to make sure VAT recovery is not lost.
- VAT adjustments for cancelled sales/events: for sales and/or events that have been cancelled, it is important to determine to what extent and under which conditions VAT can be reclaimed.
- Speed up VAT recovery in accounts payable: taken into account the delayed filing deadlines for VAT returns in some countries, grab the opportunity to ensure that purchase invoices registered after month closing can still be allocated to the correct VAT return, speeding up the VAT recovery process.
- File compliant and complete VAT refund claims: Incomplete applications could result in refusals and/or significant delays.
- Request compliant invoicing documents from vendors: to ensure input VAT recovery is allowed, purchase invoices should be received in time and be compliant with the applicable regulations.
- Consider VAT / duty deferment arrangements: Deferment arrangements allow a company to avoid import VAT payment and/or duties upon import, or in some cases postpone the payment.
- Review product and industry classification: for some products, services and even industries, reduced VAT rates or other suspension reliefs may apply. Furthermore, many countries have also special VAT schemes in place for small companies.
- Increase and expedite VAT recovery on employee expenses: VAT recovery on employee and travel expenses through foreign VAT refunds can be possible. Certain jurisdictions even allow retrospective claims on under-recovered input VAT on these expenses.
- Consider VAT grouping: In order to maximize cash-flow savings on intra-group charges, group companies could consider establishing a VAT group.
Customs duty relief
1. The Customs Code of the European Union (UCC) foresees under the title of special procedures the possibility to request for an authorization (temporary admission) that provides the total relief of import duties for the following products under the following conditions:
- Disaster relief material
Total relief from import duty shall be granted for disaster relief material where it is used in connection with measures taken to counter the effects of disasters or similar situations affecting the customs territory of the Union.
- Medical, surgical and laboratory equipment
Total relief from import duty shall be granted for medical, surgical and laboratory equipment which is dispatched on loan at the request of a hospital or other medical institution which has urgent need of such equipment to make up for the inadequacy of its own facilities and where it is intended for diagnostic or therapeutic purposes.
It has to be noted that the materials and equipment have to be re-exported out of the EU when the temporary admission ends.
2. COUNCIL REGULATION (EC) No 1186/2009 of 16 November 2009 setting up a Community system of reliefs from customs duty as follows:
- Import of instruments and apparatus intended for medical research, establishing medical diagnoses or carrying out medical treatment under certain conditions
- Import of goods or the benefit of disaster victims under certain conditions
The demand for medical protective equipment has been exacerbated in the last days and is expected to continue increasing significantly in the imminent future with accompanying shortages developing in several EU Member States.
In order to remedy and prevent a critical situation, the EU published Regulation (EU) 2020/402, making the exportation of protective equipment (e.g. face shields, mouth-nose-protection equipment, etc.) subject to an export authorization, which will be granted by the competent EU Member State where the exporter is established.