Before 1 Jan 2012 the circular letter from 1986 stated that statutory contributions (membership fees) were exempt from VAT but other specific services for specific members – not related to lobbying – were subject to VAT.
But the rules were never consistently applied, some associations had an 100% exemption agreement (written or not), and some were 100% subject to VAT, hence why the Belgian government wanted to standardise it.
A new circular letter, issued by the Belgian government and applicable as of 1 Jan 2012, says that if “representing your members” – with services as a counterpart of the membership fee or services of a trade-union nature that are in the interest of the membership as a whole – is the main activity of your association, you’re exempt from VAT when invoicing these fees, but no input VAT can be recovered. The letter also provides with a series of questions to determine if your main objective is representing your members or not.
Membership fees can thus be exempt from VAT, but additional invoiced services are applicable to VAT, but this has to be noted in separate sector agreements. If this agreement is accepted by the VAT authorities, you can also recover VAT for costs related to the separately invoiced service e.g. events or business services but also general cost such as electricity telephone etc.
Lionel also mentioned that these days Belgian VAT inspectors are much smarter (and up to date with modern technology) then in the old days. They check your website to see what your claimed activities are and they even check if you’re listed on the transparency register as a clear indication to offering lobbying services to your members. They can even check internal documents such as minutes from board meetings to see if policy positioning is discussed or not! All this is to determine whether or your organisation is actively lobbying on behalf of its members!!
Above all it all comes down to what your main activity is…
As of 1 Jan 2012 all existing agreements were ended, so all associations need to redefine their main objective to determine their new status regarding VAT and if you negotiate an agreement with your VAT inspector, make sure you have written proof of the agreement, you never know if the next inspector will respect a verbal agreement you had with his predecessor…
Another important point that was highlighted in the discussion is that all associations should have a VAT number, this is due to having to pay VAT on services invoiced from outside of Belgium, even if they are 100% exempt of VAT in their Belgian internal activities
Lionel also warned us to not forget the VAT revisions!
It was an interesting presentation – see slides here – and Lionel answered many (difficult) questions.
I hereby like to thank Lionel for his presentation and to those present. Also many thanks to PwC for sponsoring this session.
Topic: What is the impact of the new position of the VAT authorities sector and trade associations?
Speaker: Lionel Wielemans, VAT Senior Manager – PwC
Monday, 16 April 2012