All About VAT

VAT is a consumer tax. Value-added tax (VAT) is a general tax on the use and consumption of goods and services. It is a sales tax charged by you as someone who is liable for VAT on the price of the goods and services delivered by you. You pay the VAT you charge your customers to the taxman after deducting the amount of VAT that you yourself owe to your suppliers or service providers. In principle, therefore, you ultimately only pay to the government tax on the value added by you. The VAT burden is therefore only met by end-consumers: they pay VAT on the goods and services they acquired without being able to recover it.

What is the right of deduction?

Each time a product is sold or a service provided for a consideration, VAT is charged on it. The intention is that the end-consumer of the product or service will ultimately pay the VAT. That result is achieved by one of the most characteristic aspects of the VAT system: the right of deduction. The right of deduction can be summarised as follows: a person who charges VAT on his outgoing invoices may deduct the VAT he is charged on his incoming invoices. In this way, the VAT he is charged does not increase his costs. The right to deduction belongs to taxpayers who charge VAT on their services. Those not liable for VAT (such as private individuals) or persons who only engage in exempt activities (such as exempt artists) do not have a right of deduction. For them, VAT is always an extra expense.

Example:

CD sale

Basic amount

21% VAT

Total amount charged

VAT to be passed on

Record company sells to wholesaler

1000

210

1210

210

Wholesaler sells to record store

1200

252

1452

252 (incoming VAT) – 210 (outgoing VAT) = 42

(The wholesaler pays EUR 42 to the taxman)

Record store sells to customers

1500

315

1815

315 (incoming VAT) – 252 (outgoing VAT) = 63

(The record store pays EUR 63 to the taxman)

This example shows that the VAT is neutral for everyone in the sales chain except the end-consumer. In the end it is the customers of the record store who pay the VAT of EUR 315 without being able to deduct the VAT paid.

Are you liable for VAT?

To be liable for VAT as a natural person (man or woman), legal entity (non-profit organisation, ltd company, etc.) or group without independent legal status, the following conditions must be met:

  • Your artistic practice is part of an economic activity:
    As soon as you develop a certain organisation and demand a fee for your artistic services, the artistic practice will be viewed as an economic activity. If you only produce art for yourself or your family you are not liable for VAT, because you are not attempting to enrich yourself. A fee is therefore always required in order to be liable for VAT. The Court of Justice found, for example, that a busker was not liable for VAT for this activity because he did not charge for his services. The money he received from passers-by was given voluntarily.
     
  • You supply goods or provide services that are described in the VAT Code (WBTW):
    • Supply goods: you transfer power of ownership over physical movable or new immovable property.
      Examples: selling a sculpture, supplying jewellery.
    • Provide services: you are deemed to be providing a service if you are not supplying goods. You only have to pay VAT if you receive a consideration in exchange for the service. Examples: giving tattoos, dressing shop-windows, giving musical performances.

    The distinction between supply and service is important if different countries are involved and to determine which rate applies.

  • Your artistic practice takes place regularly, with a certain regularity:
    More arbitrary actions are not subject to VAT. According to the administration, a regular activity presupposes a succession of actions. However, these actions may be performed at more or less long intervals. According to the administration, a regular activity is even carried on by those who perform actions in the context of an annually organised gathering that are described in the VAT Code. Even if an artist takes part in an exhibition for the first time with a view to selling his works, that can be enough to count as sufficient regularity.
     
  • Your artistic practice takes place on a self-employed basis:

    Do you provide services for your employer as an employee? Then you do not have to pay VAT.
    Example: you are a musician and an employee of a company that organises concerts. The company-employer pays your wages each month. Therefore, VAT does not apply. If, however, the company organises a concert and you invoice your services as a musician, it will have to charge VAT on them. Only in the employer-employee relationship does VAT not apply.

    The capacity of 'self-employed' in the context of VAT legislation and that in the context of social security are not always the same. Since the introduction of the new social status for artists, artists are put on the same footing as employees for the application of social security. This equal status does not, however, have any repercussions as regards the duty to pay VAT. An artist who supplies goods or provides services other than in the context of a contract of employment will be viewed as liable for VAT.
    Example:
    A self-employed sculptor is commissioned to produce a figure for a particular company. In terms of social security, the sculptor will be able to be qualified as an employee. For VAT purposes he remains self-employed and therefore liable for VAT.
    Many artists work with SBKs. In that case, a contract of employment is entered into between the artist and the SBK. Clients in the artistic sector will also often enter into a contract of employment with the artist if the artist does not choose to be self-employed. If a contract of employment is in place, the artist is never liable for VAT!
    As a rule it can be said that if you have made art your profession on a self-employed basis, you are liable for VAT!

    Attention! Even though you satisfy all the conditions for VAT liability, this does not necessarily mean that you actually have to apply for a VAT number and have to submit VAT returns. You must check whether or not the artistic services are exempt (see below). Authors and composers who avail themselves of the services of a management company (such as SABAM) for granting copyright licences do not have to apply to register for VAT. SABAM is deemed to be granting these licences itself (see instruction no 166 of 25 November 1971 at www.fisconetplus.be).
    It is not important:

    • whether you carry on this activity with a view to making a profit or not. A non-profit organisation can therefore also be liable for VAT. The fact is, however, that many non-profit organisations within the artistic sector only perform exempt activities, which means they do not need to apply for a VAT number, submit returns or charge VAT. The flip-side is obviously that they cannot deduct the VAT on their incoming transactions.
    • whether this activity is carried on as a main or supplementary activity. A person who is self-employed as a secondary occupation can therefore also be liable for VAT.

Do you have to charge VAT?

All transactions you perform as someone who is liable for VAT are taxable. That is only not the case for (trans)actions that are explicitly exempted in the VAT Code. If this exemption applies, you do not have to charge VAT.

You can, however, opt not to charge VAT on the supply of goods and services if you are small enterprise. In that case, you are not entitled to deduct VAT. Your invoices must mention 'small enterprise subject to the tax exemption scheme. VAT not applicable '. You are viewed as a 'small enterprise ' if as someone liable for VAT you have an annual turnover below EUR 5,580. It is not always advisable to opt for the exemption scheme for small enterprises. For some activities it may be of interest to charge VAT. The VAT deduction on your expenditure can reduce costs significantly. Furthermore, the VAT rate within the artistic sector is generally just 6%, while VAT on your expenditure is generally charged at 21%.

How much VAT must you charge, and what is exempt from VAT?

  • Performing artists (musicians, actors, dancers, etc.):
    • Performances and productions: exemption (Article 44, § 2, 8° of the VAT Code) or 6% (table A, services, XXIV, Royal Decree No 20) The exemption for performing artists is discussed in detail in an administrative instruction from 1997 (instruction 13 of 19 November 1997, VAT Rev., no 131, 1092 – 1107, available at www.fisconetplus.be). According to the established case-law of the Court of Justice, exemptions must be interpreted strictly. The exemption only applies to services at and not to services by organisers. For example, the entrance fee for a meeting or presentation is in principle always taxed, even for self-organised performances (unless the exemption of Art. 44 § 2, 9° of the VAT Code applies).

      The artistic services of performing artists are exempt from VAT if ALL the following conditions are met:

      • The service provider must be a performing artist:
          

        Performing artists

        Not performing artists

        Bandleaders

        Musicians

        Conductors

        Circus artists

        Directors of plays or films

        People who do voice-overs for documentaries or animated films

        People who do voice-overs for the translation of a film

        Singers

        Compères

        Cabaret performers

        Models

        Photographic models

        Speakers at a fashion show

        etc.

        Decorators

        Make-up artists

        Hairdressers

        Props managers

        Costume designers

        Prompters

        Cameramen

        Sound technicians

        Film editors

        Impresarios

        People who do voice-overs for adverts

        etc.

         

        The examples given are based on an administrative instruction from 1997 (instruction 13 of 19 November 1997, VAT Rev., no 131, 1092 – 1107 see www.fisconetplus.be). The rigid way certain services are labelled non-artistic is at the very least debatable: there seems little reason to say that the services of a costume designer or a film editor do not contribute to the artistic realisation of a play or film. However, the court in Ghent ruled that the exemption must be interpreted strictly. The exemption only applies to performing artists who actually give the presentation, perform, play or act. Someone who only performs supporting tasks and does not perform himself cannot avail himself of the exemption, even though his contribution may be essential (Ghent, 6 June 2006, T.F.R., 15 January 2007, no 314).

        The Administration previously assumed that only performing artists who were NOT organised into a legal entity (non-profit organisation, ltd company, plc, etc.) could avail themselves of the exemption. Legal entities charges 6% VAT on their performances. To be precise, table A of Royal Decree No 20 stipulates that 6% is owed 'on services that consist in the performance of plays, ballets, pieces of music, circus, variety or cabaret shows and similar activities that belong to the normal activity of actors, bandleaders, musicians and other artists’. A key exception to this are all services associated with advertising. They are subject to the basic rate of 21% (read more about this below). The distinction between legal entities and other persons is seen as unfair. The court in Liège also found this to be the case. It ruled – in imitation of the case-law of the European Court of Justice – that the exclusion of legal entities from the exemption for performing artists contravened European Directives and the principle of equality (Liège, 18 November 2004, Fiscoloog, 984, 19). In imitation of this case-law, the Administration wanted to do away with that distinction. It was announced in a parliamentary question that from 1 October 2005, the exemption for performing artists also applied to 'legal entities and groups '. However, the report led to a great deal of unrest in the artistic sector. Specifically, the application of the exemption ruling would mean that legal entities that in the past had charged VAT and therefore had also taken into account the deduction of prepaid VAT would have to review and repay the deducted VAT. As a result of the criticism from the artistic sector, the decision to also subject legal entities to the exemption was postponed several times. Finally the administration announced that the application of the extension of that exemption to legal entities was not required for the time being and consequently one could choose whether or not to opt for the exemption. However, it is expected that the VAT legislation will be modified in the future for the sake of clarity.
         

      • The co-contractor must be an organiser of plays or concerts, a music publisher or a film-maker:
        • Organisers of plays and concerts: these are the people or groups who determine the subject, select the speaker(s), set and demand the cost of participation to attend the lecture. In any event, it is this person or group who appears on the poster as the responsible organiser in the eyes of the public.
        • Publishers of gramophone records: reimbursements from record companies to performing artists (so-called ‘royalties’), which are generally fixed at a percentage of the sale of records and CDs, are therefore exempt from VAT.
        • Film-makers and other picture carriers: these are the producers who are responsible at the highest level for the realisation of the film and who are in charge of its production. A number of years ago the Administration stated that services for TV or radio companies could not benefit from the exemption (except for programmes with a live audience), but in 2004 the Administration decided that the VAT exemption could also be applied to radio and TV performances without an audience (decision no ET 106.882 of 28 June 2004, see www.fisconetplus.be).
           
      • The services invoiced are purely in execution of an artistic service (giving a concert, performing a ballet, etc.):


        Artistic service

        Not an artistic service

        Acting, singing, reciting, declaming, playing and services that form part of the regular activity of performing artists and which are presented live in cultural centres, theatres, concert halls, operas, circus tents, etc.

        Doing voice-overs for adverts

        Selling gramophone records  

        Selling photos or brochures through members of the company to spectators during a performance

        Obligatory attendance

        Sitting on a jury

        Cutting ribbons

        Signing sessions

        etc.

    • Supplying goods: exemption for exempted parties subject to VAT (Article 44, § 2, 13° of the VAT Code)
      Example: you are a performing artist and meet all the conditions for exemption. You do not charge VAT on your invoices and cannot deduct VAT on your incoming invoices. If you have bought a piano that you use for your activity as a performing artist, you will therefore not be able to deduct the VAT charged on that piano. Say you sell the piano after a few years. The sale of pianos is not explicitly exempt. That would therefore mean that you would still have to charge VAT on this sale. This is not the case under the following conditions:
      • the piano was used for an exempt activity;
      • you did not enjoy a right of deduction when buying the piano.
         
    • Selling CDs: 21%
      The sale of CDs is not covered by the reduced rate. Despite the call from many artists to the European Commission, 21% VAT still applies to the sale of CDs.
       
    • Giving workshops: exemption or 21%
      • Giving workshops or seminars must be seen as providing education, and is a taxable service within the meaning of Article 18 of the VAT Code. But Article 44 § 2, 4° of the VAT Code exempts from VAT the provision of school or university education, vocational training and retraining and the provision of closely related services and supply of goods. This exemption also applies to private lessons if these lessons relate to material that is taught in the traditional education network or in vocational training. The exemption for education was originally explained in instruction no 19 from 1978 (www.fisconetplus.be). Based on this instruction, commercial undertakings could also provide this education and, for example, visual artists who organise workshops could benefit from the exemption.
      • The European Commission rapped Belgium’s knuckles because the exemption for education through instruction no 19 was interpreted too broadly and was not in line with the VAT Directive. As a result, instruction no 19 was replaced by instruction no 25. This instruction limits considerably the scope of the exemption for education. The exemption only applies if the school or university education, the vocational training or retraining is provided by private non-profit establishments and the income is used solely to cover expenses. The education must also be given during a period that corresponds to the academic year, in line with an educational programme and with a view to issuing a document (diploma, attestation, licence, certificate). Commercial undertakings or visual artists who organise workshops and are not linked to a recognised educational establishment can therefore no longer apply the exemption.
      • On 30 May 2005 the Council of State reversed instruction no 25 (www.fisconetplus.be). As a result, the provisions of the old instruction no 19 again came into force. For the time being, commercial undertakings or, for example, visual artists who organise workshops can again avail themselves of the exemption. If, however, these undertakings continue to tax their operations, the administration will not oppose this. Educational services that cannot benefit from the exemption are subject to the 21% VAT rate.
         
    • Advertising: 21% VAT
      VAT at 6% is owed on services that consist of performing plays, ballets, pieces of music, circus, variety or cabaret shows and similar activities that belong to the normal activity of actors, bandleaders, musicians and other artists. A key exception are all services associated with advertising. They are subject to the basic rate of 21%. Examples: an actor who performs in or provides the voice-over for an advert charges 21% VAT on his service. An artist who appears in an advertising campaign for a company also charges 21% VAT on his services.
       
    • Royalties from record companies: exemption (Article 44, § 2, 8° of the VAT Code)
      Reimbursements paid by record companies to performing artists (so-called ‘royalties’), which are generally fixed at a percentage of the sale of records and CDs, are exempt from VAT. That is only the case if the performing artist appears as a physical person. If as a performing artist you are also the composer of the songs, read authors and composers (instruction 13 of 19 November 1997, VAT Rev., no 131, 1092 – 1107, see www.fisconetplus.be).
       
    • Transfer of accompanying rights: 6% VAT (table A, services, XXIV, Royal Decree No 20)
      If the performing artist receives a reimbursement for the transfer of his accompanying rights that is not a royalty, the reduced rate of 6% applies. The Article stipulates that a rate of 6% applies to the transfer of copyright and the granting of rights to copyright, with the exception of those relating to computer programs (table A of Royal Decree No 20). The administration understands copyright to mean both copyright (the rights of the creating artist) and the accompanying rights (the rights of the performing artist). Example: a musician receives a reimbursement from the owner of a website because his songs can be heard on the site. VAT at 6% applies to this service. Nevertheless, the administration introduced an exception by instruction of 25 November 1971: if authors or composers turn to Sabam or another company that is responsible for collecting reimbursements for the public performance of artistic works, they are not viewed as being liable for VAT. If these authors do not carry on any other VAT activities, they will therefore not have to apply for a VAT number (instruction no 166 of 25 November 1971, see www.fisconetplus.be).
       
    • Other: 21%. If the deliveries and services are not exempt from VAT (Article 44 of the VAT Code) or are not subject to the reduced rate (table A of Royal Decree No 20), the normal rate of 21% applies.
       
  • Visual artists (painters, sculptors, etc.)
    • Sale of works of art: 6 % (table A, goods, XXI, Royal Decree No 20) or 21% VAT
      • Deliveries of works of art by their creator or his rightful claimants is subject to 6% provided that:
        • these are made by the creator or his rightful claimant;
        • these are made occasionally by a taxpayer other than a taxpaying retailer if these works of art were imported by this taxpayer himself or were delivered to him by the creator or his rightful claimant or if they have produced in his favour a right to deduct VAT in full;
        • the work of art is original (paintings, sculptures, prints, etchings, lithographs, tapestries, ceramics, enamels, photos, etc.). The list of works of art is exhaustive and is to be interpreted strictly.
          De lijst van opgesomde kunstwerken is limitatief en strikt te interpreteren.
      • All other works of art and art forms not explicitly listed in Section XXI of Annexe A to Royal Decree No 20 are subject to a VAT rate of 21%.
         
    • Hire of works of art: 21% VAT
      The hiring of works of art is a service. VAT at 21% is due on the hiring of works of art (paintings, sculptures, photos, etc.)
       
    • Giving workshops: exemption or 21%
      • Giving workshops or seminars must be seen as providing education, and is a taxable service within the meaning of Article 18 of the VAT Code. But Article 44 § 2, 4° of the VAT Code exempts from VAT the provision of school or university education, vocational training and retraining and the provision of closely related services and supply of goods. This exemption also applies to private lessons if these lessons relate to material that is taught in the traditional education network or in vocational training. The exemption for education was originally explained in instruction no 19 from 1978 (www.fisconetplus.be). Based on this instruction, commercial undertakings could also provide this education and, for example, visual artists who organise workshops could benefit from the exemption.
      • The European Commission rapped Belgium’s knuckles because the exemption for education through instruction no 19 was interpreted too broadly and was not in line with the VAT Directive. As a result, instruction no 19 was replaced by instruction no 25. This instruction limits considerably the scope of the exemption for education. The exemption only applies if the school or university education, the vocational training or retraining is provided by private non-profit establishments and the income is used solely to cover expenses. The education must also be given during a period that corresponds to the academic year, in line with an educational programme and with a view to issuing a document (diploma, attestation, licence, certificate). Commercial undertakings or visual artists who organise workshops and are not linked to a recognised educational establishment can therefore no longer apply the exemption.
      • On 30 May 2005 the Council of State reversed instruction no 25 (www.fisconetplus.be). As a result, the provisions of the old instruction no 19 again came into force. For the time being, commercial undertakings or, for example, visual artists who organise workshops can again avail themselves of the exemption. If, however, these undertakings continue to tax their operations, the administration will not oppose this. Educational services that cannot benefit from the exemption are subject to the 21% VAT rate.
         
    • Restoration of works of art: 21% VAT
       
    • Publishing contracts: exemption (§ 3, 3° of the VAT Code from Article 44)
      Publishing contracts for literary works or works of art that the author or composer enters into with a publisher are exempt from VAT. You may only avail yourself of the exemption if the following conditions are met:
      • Voorwaarde 1: Condition 1: author = natural person
        The administration only accepts the exemption for authors who appear as natural persons. If the authors appear in the form of a legal entity, the exemption will not apply. This distinction is perhaps unfair and discriminatory, but the position was confirmed by case-law.
      • Condition 2: other party = publisher
        The contract must be entered into between the author and the publisher, not, for example, between 2 publishers.
      • Condition 3: publishing contract
        A publishing contract within the meaning of Article 44 § 3, 3° of the VAT Code presupposes the existence of copyright in respect of the author. The purpose of the contract is to realise the copyright through its material multiplication in a number of permanent copies (e.g. in books), so that it can be made available to a wide public. The co-contractor must be obliged to publish the work.

      Example: a painting is published in an art book. The painter (as a natural person) receives a reimbursement for this from the publisher of the art book. The service is exempt from VAT.
       

    • Transfer of copyright: 6% VAT (table A, services, XXIV, Royal Decree No 20)
      For publishing contracts to be exempt from VAT, the contract must be entered into between the author as a natural person and the publisher. If this condition is not satisfied, but rights are nevertheless transferred, VAT is owed at 6%. Royal Decree No 20 stipulates that 6% applies to the transfer of copyright and the granting of rights to copyright, with the exception of those relating to computer programs. Example: a painting is published in an art book. The painter’s limited company (not a natural person) receives a reimbursement for this from the publisher of the art book. This service is liable for 6% VAT. For publishing contracts to be exempt from VAT, the purpose of the contract must also be to realise the copyright through its material multiplication in permanent copies (e.g. in books), so that it can be made available to a wide public. Sometimes there is no material multiplication in permanent copies, but nevertheless a transfer of copyright. Example: a sculptor receives a reimbursement because he gives permission for his sculpture to be shown on the Internet (no multiplication in permanent copies, therefore no publishing contract). VAT at 6% applies to this service.
      By instruction of 25 November 1971 the administration introduced an exception to this 6%. If authors turn to Sabam or another company responsible for collecting reimbursements for the public showing of artistic works, they are not viewed as being liable for VAT. If the authors do not carry on any other VAT activities, they will not therefore have to apply for a VAT number (instruction no 166 of 25 November 1971, see www.fisconetplus.be).
       
    • Other: 21%.If the deliveries and services are not exempt from VAT (Article 44 of the VAT Code) or are not subject to the reduced rate (table A of Royal Decree No 20), the normal rate of 21% applies.
       
  • Authors and composers
    • Giving workshops: exemption or 21%
      • Giving workshops or seminars must be seen as providing education, and is a taxable service within the meaning of Article 18 of the VAT Code. But Article 44 § 2, 4° of the VAT Code exempts from VAT the provision of school or university education, vocational training and retraining and the provision of closely related services and supply of goods. This exemption also applies to private lessons if these lessons relate to material that is taught in the traditional education network or in vocational training. The exemption for education was originally explained in instruction no 19 from 1978 (www.fisconetplus.be). Based on this instruction, commercial undertakings could also provide this education and, for example, visual artists who organise workshops could benefit from the exemption.
      • The European Commission rapped Belgium’s knuckles because the exemption for education through instruction no 19 was interpreted too broadly and was not in line with the VAT Directive. As a result, instruction no 19 was replaced by instruction no 25. This instruction limits considerably the scope of the exemption for education. The exemption only applies if the school or university education, the vocational training or retraining is provided by private non-profit establishments and the income is used solely to cover expenses. The education must also be given during a period that corresponds to the academic year, in line with an educational programme and with a view to issuing a document (diploma, attestation, licence, certificate). Commercial undertakings or visual artists who organise workshops and are not linked to a recognised educational establishment can therefore no longer apply the exemption.
      • On 30 May 2005 the Council of State reversed instruction no 25 (www.fisconetplus.be). As a result, the provisions of the old instruction no 19 again came into force. For the time being, commercial undertakings or, for example, visual artists who organise workshops can again avail themselves of the exemption. If, however, these undertakings continue to tax their operations, the administration will not oppose this. Educational services that cannot benefit from the exemption are subject to the 21% VAT rate.
         
    • Sale of newspapers, magazines and books: 6% VAT (table A, goods, XIX, Royal Decree No 20)
       
    • Publishing contracts: exemption (§ 3, 3° of the VAT Code from Article 44) Publishing contracts for literary works or works of art that the author or composer enters into with the publisher are exempt from VAT. You may only avail yourself of the exemption if the following conditions are met:
      • Condition 1: author or composer = natural person The administration only accepts the exemption for authors and composers who appear as natural persons. If the authors or composers appear in the form of a legal entity, the exemption will not apply. This distinction is perhaps unfair and discriminatory, but the position was confirmed by case-law.
      • Condition 2: other party = publisher
        The contract must be entered into between the author / composer and the publisher, not, for example, between 2 publishers.
      • Condition 3: publishing contract
        A publishing contract within the meaning of Article 44 § 3, 3° of the VAT Code presupposes the existence of copyright in respect of the author / composer. The purpose of the contract is to realise the copyright through its material multiplication in a number of permanent copies (e.g. on CDs or in books), so that it can be made available to a wide public. The co-contractor must be obliged to publish the work. Example: an author enters into a publishing contract with the publisher to publish his novel. This service is exempt from VAT. Even if a composer enters into a record contract with a record company, this service is exempt from VAT.
         
    • Transfer of copyright: 6% VAT (table A, services, XXIV, Royal Decree No 20)
      For publishing contracts to be exempt from VAT, the contract must be entered into between the author as a natural person and the publisher. If this condition is not satisfied, but rights are nevertheless transferred, VAT is owed at 6%. Royal Decree No 20 stipulates that 6% applies to the transfer of copyright and the granting of rights to copyright, with the exception of those relating to computer programs. Example: a poet’s poem is published in a magazine. The poet’s limited company (not a natural person) receives a reimbursement for this from the publisher of the magazine. This service is liable for 6% VAT.
      For publishing contracts to be exempt from VAT, the purpose of the contract must also be to realise the copyright through its material multiplication in permanent copies (e.g. on CDs or in books), so that it can be made available to a wide public. Sometimes there is no material multiplication in permanent copies, but nevertheless a transfer of copyright.
      Example: a composer produces a composition for a theatre company. The theatre company wants to use the piece during its performance. In that case, 6% applies.
      By instruction of 25 November 1971 the administration introduced an exception to this 6%. If authors or composers turn to Sabam or another company responsible for collecting reimbursements for the public showing of artistic works, they are not viewed as being liable for VAT. If the authors do not carry on any other VAT activities, they will not therefore have to apply for a VAT number (instruction no 166 of 25 November 1971, see www.fisconetplus.be).
       
    • Readings and lectures: exemption (Article 44, § 2, 8° of the VAT Code)
      The services of lecturers to organisers of lectures are exempt from VAT. a lecturer is someone who speaks at a meeting or gathering on subjects that may prove educational if heard.
      Example: the reimbursement for an author who gives a reading from his collected work is exempt from VAT.
      This exemption also applies to actions performed by persons acting as guides if they are provided to an organiser of guided tours in museums, castles, churches or cities. The exemption does not apply if guides provide their services directly to travellers or visitors.
      The reimbursement or the entrance fees that the organiser demands are not exempt from VAT, unless the exemption for cultural establishments or for education applies.
       
    • Deliveries of goods: exemption for exempted parties subject to VAT (Article 44, § 2, 13° of the VAT Code)
      Example: you are an author and satisfy all the conditions for exemption. You do not charge VAT on your invoices and cannot deduct VAT on your incoming invoices. If you have bought a computer that you use for your activity as an author, you will therefore not be able to deduct the VAT charged on that computer. Say you sell the computer after a few years. The sale of computers is not explicitly exempt. That would therefore mean that you would still have to charge VAT on this sale. This is not the case under the following conditions:
      • the computer was used for an exempt activity;
      • you did not enjoy a right of deduction when buying the computer.
         
    • Other: 21%
      If the deliveries and services are not exempt from VAT (Article 44 of the VAT Code) or are not subject to the reduced rate (table A of Royal Decree No 20), the normal rate of 21% applies.

When does mixed VAT liability apply?

  • What is mixed VAT liability?
    Mixed VAT liability arises when someone who is liable for VAT performs both actions that are subject to VAT and actions that are exempt from VAT by Articles 39 to 42 inclusive or Article 44 of the VAT Code. Example: if a visual artist sells a work of art to a cultural centre, the artist will charge VAT on that sale. If the visual artist is also an author and receives reimbursements from the publisher for the publishing contract, he does not invoice VAT on these services. In other words, he acquires a mixed VAT liability.
    Example: a recognised cultural centre regularly organises theatrical performances. All the conditions for these performances to come under the VAT exemption are met. The cultural centre also has a cafeteria. This income is not exempt from VAT. Because the cultural centre carries on both exempt and non-exempt activities, it has a mixed VAT liability.
     
  • What are the consequences of mixed VAT liability?
    The consequences of mixed VAT liability are mainly of importance for the right of deduction. Anyone who is liable for VAT is entitled to deduct the VAT he is charged on his incoming invoices, provided these incoming invoices relate to an activity that is subject to VAT. You can therefore only deduct the VAT on your incoming invoices if you charge VAT on your outgoing operations.
     
  • How do you calculate the right to deduction of someone with mixed VAT liability?
    There are 2 possible ways:
    • 1st way: ratio method: the turnover from the non-exempt operations is related to the global turnover..
      Example: a cultural centre finds itself in the following situation:

       

      Cafeteria

      Theatrical performances

      Turnover

      EUR 20,000 + EUR 4,200 VAT

      EUR 10,000

       

      Ratio for right to deduction

      20,000/30,000 = 66.67%, always to be rounded up to the nearest unit

      Incoming invoices

      EUR 15,000 + EUR 3,150 VAT

      EUR 8,000 + EUR 1,680 VAT

      VAT

      EUR 3,150

      EUR 1,680

      VAT to be deducted

      (3,150 + 1,680) x 67% = EUR 3,236.10

      VAT to be paid to the Treasury

      (3,150 + 1,680) – 3,236.10 = EUR 963.90

    • 2nd way: actual attribution method: The VAT on an incoming invoice is deducted in full if this invoice relates to the non-exempt activity. Conversely, no right to deduction will be exercised on invoices relating to the exempt activity.
      Once again the example of the cultural centre:

       

      Cafeteria

      Theatrical performances

      Turnover

      EUR 20,000 + EUR 4,200 VAT

      EUR 10,000

       

      Incoming invoices

      EUR 15,000 + EUR 3,150 VAT

      EUR 8,000 + EUR 1,680 VAT

      VAT

      EUR 3,150

      EUR 1,680

      VAT to be deducted

      EUR 3,150

      VAT to be paid to the Treasury

      4,200 – 3,150 = EUR 1,050

      Someone with mixed tax liability will often have expenses that cannot clearly be assigned to one activity or the other (e.g. administrative expenses or investments such as computers that are used for both activities). The ratio applied to these expenses may be fixed in any way at all, provided objective criteria are applied.

      As a rule, those with mixed tax liability will apply the general ratio method. If that would lead to a disproportionate right of deduction, the taxpayer can ask the administration for permission to apply the actual use method. In the event of a disproportionate right of deduction, the administration can also impose the actual use method.

Do I have to charge VAT on the total invoice amount?

VAT is calculated by applying the VAT rate to the 'taxable amount'. The taxable amount consists of the consideration received by the taxpayer from his co-contractor. VAT must be calculated on everything the artist receives or should receive as consideration from the party to whom the product is delivered or for whom the service is provided (or where applicable from a third party), including any subsidies directly linked to the price of these operations.
The consideration will generally consist of a sum of money. That amount also includes the costs of commission, insurance and transport, as well as the taxes, duties and charges levied by the seller.
Price reductions, discounts, costs for ordinary and standard packaging or interest due to late payment and the VAT itself are not part of the taxable amount. If a contract of sale explicitly allows for a price reduction (expressed as a percentage or as a fixed amount) compared to the initial selling price, the invoice must mention the final price asked of the customer, the initial price and the amount of the price reduction granted by the supplier. VAT is only due on the amount actually paid.

What are the administrative obligations?

  • Administrative obligations for a VAT payer exempt from VAT without a right of deduction (a VAT payer who only performs activities exempt in Article 44).
    • You provide your services in Belgium with Belgian customers and you do not make any purchases abroad: In principle, you do not have any administrative obligations (no notification of start of VAT activity to the VAT office, no VAT return, etc.).
    • You provide cross-border services or make purchases abroad (find out more about working abroad). Further obligations:
      • When buying goods in another EU state: Do you make purchases in another Member State of the EU that amount to more than EUR 11,200 on an annual basis? Or do you choose to subject purchases below this threshold to Belgian VAT because the Belgian VAT rate is lower than the foreign one (submit declaration of choice to your VAT office)? Then you must notify your VAT office of this and submit a special VAT return. You will then be given a BE VAT number. You must always inform the foreign supplier of your BE VAT number if Belgian VAT applies.
      • For cross-border services:
        • You purchase a service from a service provider based in the EU:
          For cross-border services in the EU, the VAT of the country of the purchaser applies (except for anomalies. Report this to your VAT office and submit a special VAT return no later than the 20th day of the month after the quarter. You will then be given a BE VAT number. You must always inform the foreign service provider of your BE VAT number if Belgian VAT applies.
        • You provide the service to a customer based in the EU:
          • To a party liable for VAT:
            For cross-border services in the EU, the VAT of the country of the purchaser applies (except for anomalies). On your invoice, write ‘VAT to be paid by co-contractor, with reference to the applicable VAT article’. The foreign VAT-liable customer will then pay the VAT abroad. If it is the first time you are providing the service, you must inform your VAT office. You will then be given a BE VAT number. You must also include the total amount of services that are actually taxed abroad in a VAT statement of intracommunity transactions to be submitted each quarter.
          • To a party not liable for VAT:
            For cross-border services in the EU, the VAT of the country of the service provider applies (except for anomalies). Belgian VAT applies, so no specific administrative obligations apply here.
             
  • Administrative obligations of a small enterprise (annual turnover of less than EUR 5,580):
    • You provide your services in Belgium with Belgian customers and you do not make any purchases abroad:
      • Notification of start of activity via form 604A: standard form in which you declare that you are starting an activity that is subject to VAT. In this notification you can declare that in all probability you satisfy the conditions for a small enterprise. From 1 January 2010, the VAT number that is assigned to small exempt undertakings will be converted into a BE VAT number.
      • Draw up invoices: you must make out invoices for the services you provide. However, you do not need to charge VAT on these invoices. The invoice must include the following statement: ‘small enterprise subject to the tax exemption scheme, VAT not applicable’. You do not need to draw up an invoice if you provide services for or deliver goods to private individuals. An invoice must contain all the mandatory information. This conformity is extremely important, both for the person issuing it and for the person receiving it. If you make out an invoice that does not conform, this could lead to a fine being imposed on you. But receiving an invoice that does not conform can also have unwelcome repercussions for your co-contractor. The VAT you charged is non-deductible. Each invoice must at least include the following information:
        • date and serial number;
        • name, address, enterprise number and VAT number of the party liable for VAT;
        • name, address and where applicable VAT number of the co-contractor;
        • description of the delivery or service being invoiced;
        • taxable amount by rate;
        • rate and amount of tax owed.
      • Retain documents relating to your economic activity: retain incoming invoices and duplicates of your outgoing invoices in an unbroken series of numbers assigned on receipt or issue. You can also keep an incoming and an outgoing invoice book.
      • Keep a diary of receipts for each day.
      • Draw up an annual list of customers: submit list of taxpaying customers (before 31 March of the following year). This list need only show the annual turnover in the relevant box.
      • Report passing of threshold of EUR 5,580 by means of a registered letter to the competent VAT office: the next month you will become an ordinary VAT payer.
      • Report the ending of an activity.
    • You provide cross-border services or make purchases abroad (find out more about working abroad). Further obligations:
      • When buying goods in another EU state:
        Do you make purchases in another Member State of the EU that amount to more than EUR 11,200 on an annual basis? Or do you choose to subject purchases below this threshold to Belgian VAT because the Belgian VAT rate is lower than the foreign one (submit declaration of choice to your VAT office)? Then you must notify your VAT office of this and submit a special VAT return. You will then be given a BE VAT number. You must always inform the foreign supplier of your BE VAT number if Belgian VAT applies.
      • For cross-border services:
        • You purchase a service from a service provider based in the EU:
          For cross-border services in the EU, the VAT of the country of the purchaser applies (except for anomalies). Report this to your VAT office and submit a special VAT return no later than the 20th day of the month after the quarter. You will then be given a BE VAT number. You must always inform the foreign service provider of your BE VAT number if Belgian VAT applies.
        • You provide the service to a customer based in the EU:
          • To a party liable for VAT:
            For cross-border services in the EU, the VAT of the country of the purchaser applies (except for anomalies). On your invoice, write ‘VAT to be paid by co-contractor, with reference to the applicable VAT article’.
            The foreign VAT-liable customer will then pay the VAT abroad. If it is the first time you are providing the service, you must inform your VAT office. You will then be given a BE VAT number. You must also include the total amount of services that are actually taxed abroad in a VAT statement of intracommunity transactions to be submitted each quarter.
          • To a party not liable for VAT: For cross-border services in the EU, the VAT of the country of the service provider applies (except for anomalies). Belgian VAT applies, so no specific administrative obligations apply here.
             
  • Administrative obligations of an ordinary VAT payer:
    • Notification of start of activity to the VAT inspection office of his place of residence.
    • Submit VAT return: each quarter or each month (for turnovers in excess of EUR 1,000,000 or exempt intracommunity deliveries of goods for an annual amount greater than EUR 400,000).
    • Draw up invoices: you must make out invoices and charge VAT on them. An invoice must contain all the mandatory information. This conformity is extremely important, both for the person issuing it and for the person receiving it. If you make out an invoice that does not conform, this could lead to a fine being imposed on you. But receiving an invoice that does not conform can also have unwelcome repercussions for your co-contractor. The VAT you charged is non-deductible. Each invoice must at least include the following information:
      • date and serial number;
      • your name, address, enterprise number and VAT number;
      • name, address and where applicable VAT number of the co-contractor;
      • description of the delivery or service being invoiced;
      • taxable amount by rate;
      • rate and amount of tax owed.

      If you do not charge VAT on your invoice, the invoice must state the reason why, e.g.:

      • A visual artist sells a painting to a French company that specifies a French VAT number. The painting is transported from the studio in Belgium to the headquarters of the company in Paris. The visual artist will not charge VAT. On his invoice he states: intracommunity delivery, exempt from VAT, Article 39a of the VAT Code.
      • Another visual artist sells a painting to a Japanese person. The painting is shipped from Belgium to Japan. In this case too, the visual artist does not charge VAT. The invoice states: export, exempt from VAT, Article 39 of the VAT Code.
    • Retain invoices: you must retain incoming and duplicates of outgoing invoices for 7 years.
    • Keep accounts:
      • book for incoming invoices;
      • book for outgoing invoices;
      • diary of receipts per headquarters;
      • centralisation book if there are several headquarters;
      • returns/refund register;
      • table of operating funds;
      • customer accounts;
      • register of goods dispatched;
      • register of materials forwarded.
    • Pay VAT: no later than the 20th of the month after the end of the quarter or month to which the return relates.
    • Draw up a list of customers with taxpaying customers and turnover.
    • Specification of intracommunity goods and services (if VAT is transferred to foreign customer): each quarter (unless zero-listing).
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