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Samir Haouari |
Peter Ackerman |
The pace at which these VAT rules evolve requires businesses to be watchful and to react accordingly. Also in the first half of 2012 there have been some interesting developments, notably in connection to the VAT revision period as well as to the VAT exempt immovable rent. As a general rule VAT taxpayers can immediately deduct input VAT they incur. However, specifically for investment goods, as the legislation foresees in the period during which the initial VAT deduction can be revised should the investment goods no longer be used for the taxable activities. For immovable property this revision period equals 15 years. In the past the 15-year period started on January 1 of the year in which the VAT became due (at the moment of the supply unless the invoice is issued or the payment is received before the supply in which case the VAT would become due on that previous point in time). According to a recent administrative decision which took effect from January 1 2012, the VAT revision period starts on January 1 of the year in which the immovable property is taken into use. In practice this comes down to an extension of the VAT revision period, certainly in situations where the construction and the invoicing are spread over multiple years.
Another important development relates to a Belgian court case on the VAT exempt immovable rent. An immovable rent is in principle VAT exempt in Belgium and does not grant any right to deduct input VAT. Hence the reason why many taxpayers seek for VAT-able alternatives that will enable them to deduct the often large amounts of input VAT they incur in connection to the building. Since the Temco-case of the European Court of Justice in 2004, it has been generally accepted that the essential object of a VAT-exempt immovable rent is the passive manner in which the immovable property is put at the disposal irrespective of whether the tenant has an exclusive enjoyment of the immovable property. However, recently the Brussels Court of Appeal leaned towards a more civil law approach by stating that the exclusive enjoyment is an essential element to constitute a VAT exempt immovable rent.
With respect to the revision period the new administrative point of view provides a clear and workable ground rule, although not always beneficial for the taxpayer. In relation to the VAT exempt immovable rent, the interpretation of the court limits the scope of the VAT exemption and could therefore create opportunities. The practical impact is however less clear, certainly given the fact that Belgian authorities did not yet officially react to this judgment.
Samir Haouari (shaouari@kpmg.com) & Peter Ackerman (packerman1@kpmg.com)
KPMG
Tel: +32 2 708 43 00
Website: www.kpmg.com/be
