If you are a sole proprietor in Belgium, it is possible that you start as a company not subject to VAT. But what happens if you suddenly exceed the €25,000 turnover threshold per year and become subject to VAT? This article will help you understand what this means and what you need to do to make this transition smoothly.
When do you become subject to VAT? 🤷♂️
As mentioned earlier, in principle, you are subject to VAT as a self-employed person in Belgium. However, if your annual turnover is less than €25,000, you can choose the VAT exemption for small businesses. If your turnover exceeds this threshold, this exemption expires and you become subject to VAT.
It is important to note that it is your own responsibility to keep an eye on this. If you work with an accountant, they can help you with this, but ultimately it is up to you to take actions if you notice that you are going to exceed the threshold.
Liberal and social professions are also exempted from VAT, view them here!
Tip:
Through Dexxter ‘s accounting platform, we will automatically let you know when you reach the €25,000 threshold!
How do you change your vAT type in Dexxter?
How do you go from being exempted from VAT to subject to VAT in Dexxter?
What should you do if you become subject to VAT: a roadmap📝?
If you become subject to VAT, there are an amount of steps you need to go through to ensure a smooth transition.
1️⃣ Inform the tax authorities: As soon as you notice that you are going to exceed the €25,000 threshold, you must inform the tax authorities. You do this by submitting an application to change your vAT scheme.
2️⃣ Question a vAT number: If you do not yet have a vAT number, you must apply for one from the tax authorities. If you already have a vAT number, but it was inactive because of the VAT exemption, you need to question the tax authorities to activate it.
3️⃣ Start charging vAT: Once you are subject to VAT, you have to charge VAT on your sales. This means you have to pass on the VAT you charge to your customers to the tax authorities.
4️⃣ File VAT declaration: As a VAT subject to VAT, you have to file vAT declarations periodically (usually quarterly).
How do vAT declarations and payments work? 💼
As a subject to VAT, you are required to do periodic vAT declarations. You usually do this quarterly, but in some cases it can also be monthly. In this vAT declaration, you state how much vAT you have collected and how much you have spent. The difference between these two amounts is the amount you have to pay to the tax authorities.
Paying the vAT is usually done via a transfer to the tax authorities’ account. Also be sure not to forget the structured communication, otherwise the VAT administration will not link the payment to your file. It is important to do this payment on time, otherwise fines and interest may be charged!
Tip:
Using just 5 steps, you can easily and correctly file a vAT declaration via Dexxter.
For the payment of vAT declarations, we also provide a QR code so you cannot make any mistakes!
Points of attention 🚧
There are an amount of things to consider when you become subject to VAT.
- Invoicing: Once you become subject to VAT, you have to charge VAT on your invoices. This means that your vAT number should definitely be on your invoices.
- Accounting: As a VAT subject, your accounting becomes a bit more complex. Not only do you have to keep track of how much vAT you charge, but also how much you spend. Fortunately, Dexxter makes this super easy!
- Cash flow: Moving from being exempted from VAT to subject to VAT can have an impact on your cash flow. After all, you have to pass on the vAT you charge your customers to the tax authorities. It is important to take this into account in your financial plan here.
Be sure to view our article on the 5 most common mistakes with a vAT declaration so that you are always okay!
Conclusion 🎯
The transition from exempted from VAT to subject to VAT can be challenging, but with the right preparation and support, it is certainly achievable. By taking timely actions and getting assistance from an accountant, you can make this transition go smoothly.
Still have questions about vAT? Then be sure to view our article on everything you need to know about vAT. 🙌
