The Belgian small business exemption scheme: invoicing without VAT

Belgium has its own counterpart to the Dutch small businesses scheme (KOR): the special exemption scheme for small businesses (bijzondere vrijstellingsregeling kleine ondernemingen, article 56bis of the Belgian VAT Code). If you take part, you charge no VAT and file no periodic VAT returns. Here is how it works.

Who is the scheme for?

The scheme is meant for businesses established in Belgium with a turnover of at most 25,000 euro (excluding VAT) per calendar year. You apply for it with the FOD Financiën, the Belgian tax authority. If your business is established in the Netherlands, this scheme does not apply to you; the Dutch KOR does.

What it means for your invoices

• No VAT: your invoice shows no VAT amount and no VAT rate.
• Mandatory note: every invoice must carry the text “Bijzondere vrijstellingsregeling kleine ondernemingen”. Unlike the Dutch KOR, this is not a recommendation but a requirement.
• Everything else stays the same: a unique invoice number, date, description and your details are still required.

Reverse charge and clients abroad

The exemption only covers turnover that is taxed in Belgium. If you provide a service to a business in another EU country, that service is usually taxed in your client’s country. The exemption scheme does not change that: the invoice still reverse-charges the VAT to your client. For clients in Belgium the exemption applies, even where VAT would normally be reverse-charged.

Watching the threshold

If your turnover goes over 25,000 euro during the year, the exemption no longer applies and you charge VAT again. Report it to the FOD Financiën in time, and check with your accountant from which invoice onwards you have to charge VAT.

Pros and cons

• Pro: no periodic VAT returns, so less paperwork. For private clients you are effectively cheaper, since they cannot deduct VAT anyway.
• Con: you cannot reclaim the VAT on your own purchases and investments. For business clients, who normally deduct VAT, your invoice without VAT is not cheaper.

The exemption scheme in factuurmaken

If your business is established in Belgium, you turn the scheme on in your company details. From then on your invoices and quotes carry no VAT and the mandatory note is added automatically. Reverse charge keeps working for clients abroad. Your dashboard warns you once your turnover this year gets close to 25,000 euro.

If you are unsure whether the scheme suits your situation, ask your accountant or the FOD Financiën.