Does your vAT declaration show that you have a VAT balance in your favour? In other words, you have more recoverable VAT on your purchases than there is payable VAT on your income?
Either you transfer that credit to the next vAT declaration and can then offset it against any VAT payable from the next vAT declaration(s), or you effectively question the VAT credit back and have it deposited into your bank account, in other words.
Please note 1️⃣! For a VAT credit to be refunded, it must exceed a certain minimum threshold (see below), which has recently been drastically reduced.
Attention 2️⃣! A VAT credit is only paid back after all uncontested debts to the FPS Finance have been discharged. For example, after withholding for an outstanding balance of personal income tax to be paid.
Attention 3️⃣! A VAT credit can only be claimed back on submission of a timely vAT declaration.
Threshold to question refund drops
Since 1 April 2021, the minimum thresholds to effectively claim a vAT credit refund have been drastically reduced.
Since 1 April 2021, the VAT administration has been applying a minimum of €400 in quarter 1, 2 & 3 before they want to effectively refund. This is to keep things a bit easy administratively, that way they don’t have to start refunding relatively small amounts to entrepreneurs.
In quarter 4, that minimum threshold to qualify for a refund even lowers to just €50.
To arrive at the total amount of the minimum threshold, vAT credits from previous quarters may also be taken into account. Put another way, if there were also previous quarters’ VAT credits that were too small to be refunded, they may all be added up to still reach the minimum threshold.
Have you filed your vAT declaration on time, met the minimum threshold and requested the refund through the declaration itself? Then the VAT administration will refund the total VAT credit within 3 months.
Did you know.
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What if I don’t reclaim my vAT credit?
You always can! You must effectively request a refund via the vAT declaration. If you don’t, your VAT credit will simply remain in the VAT administration.
You can view a VAT credit as a kind of savings account with the VAT authorities (although one that will not earn you any interest 😉 ). Either you question a refund or you leave the credit in the ‘savings account’, however large or small that VAT credit might be. That savings account will then automatically be used next quarters for a vAT balance to be paid.
Should I always reclaim a VAT credit then?
Why not? Rumour has it that anyone who questions a refund is extra likely to face a VAT audit. After all, a central service of the VAT administration selects, based on risk analysis, from the list of requests for refunds, an amount of dossiers that should be checked anyway.
Why? That inspection is normally rather limited. In principle, the inspector will only check the cause of your credit, often with a few simple questions by e-mail.
For example, if the cause of the VAT credit is a relatively large investment, it is often sufficient to send a copy of the investment invoices should a question follow.
What is the best thing to do then?
- Can you put the money to good use?
- Is the vAT amount so large that offsetting it against future vAT amounts to be paid would take a year or more?
- Is there a balance in your favour every quarter because your income is invoiced at 0% VAT or 6% VAT for a large chunk, for example?
Then feel free to have your VAT credit refunded, but know that the administration might ask you some questions. Which isn’t a problem if you can explain the reason well.
However, if you don’t need the money right away, you can choose to carry your credit over to the next quarter.
Source reference:
Indicator – Larcier
www.mijntipsenadvies.be – www.indicator-larcier.be
