Belgium: VAT exemption not available | KPMG | GLOBAL

Belgium: VAT exemption not available, IGPs in financial, insurance sectors

Belgium: VAT exemption not available

In Belgium, a provision on the value added tax (VAT) exemption applicable for “independent group of persons” or IGP (also known as “cost-sharing groups”) was effective 1 July 2016, and following guidance from the Belgian VAT authorities in late 2016, there were adjustments made to numerous existing IGPs in the beginning of 2017. Yet, in light of recent judgments from the Court of Justice of the European Union (CJEU), the IGP regime may be amended again.

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The CJEU judgments concluded no IGPs were to be available for financial or insurance sectors. The judgments were based on the VAT Directive. Specifically, the structure of the VAT Directive provides that the IGP exemption of article 132, 1(f) is within Chapter 2 of title IX “Exemptions for certain activities in the public interest.” However, financial and insurance activities are grouped in article 135 within Chapter 3 “Exemptions for other activities.” According to the CJEU, the IGP exemption relates to article 132, 1(f) and thus is not meant to apply to “other activities” that benefit from their own exemptions. Unlike not-for-profit sectors, the financial and insurance sectors can no longer apply the IGP exemption.

What’s next?

Now that the CJEU has reached its conclusions, tax professionals await to see whether and how the Belgian rules are amended by the VAT authorities. In the meanwhile, solutions for the banking and insurance sectors need to be considered in order to address possible exposure to VAT additional costs that result from these rulings. 

 

Read a September 2017 report prepared by the KPMG member firm in Belgium

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