21. Sales (Value-Added) Taxes
VAT is a tax on goods or services supplied in the course of independently carrying on a business or other economic activity in Belgium. Salaried employment is, therefore, outside the scope of the tax.
As a general rule, the place from which any goods are supplied or where the provider of services is established determines whether an activity takes place in Belgium. However, there are exceptions, for example:
Service Where Supplied
In respect of immovable property Where land is situated
On movable goods Where goods or recipient is located
Conferences, exhibitions, entertainment, training, and education Where service is performed
Financial services, consulting services, most equipment
leasing, use of intellectual property, and advertisingWhere
recipient is located
VAT is also due on goods imported into Belgium from a country that is outside the EU and on goods that have been acquired?(i.e., imported) from other EU Member States under the EU Single Market procedures.
VAT is charged at the following rates, unless the goods or services are outside the scope of VAT or exempt from VAT:
Standard rate 21%
Lower rate
pay-television 12%
products to cure plant diseases 12%
for such basic necessities as food, pharmaceuticals 6%
gold for investment 1%
newspapers nil
Exemptions apply, inter alia, to certain banking, insurance, and financial services, property transactions education and health services, certain nonprofit-making activities, and public postal services. Supplies that are not exempt are referred to as taxable supplies.
To avoid double taxation, credit is given for VAT paid on goods and services used for the purpose of making any taxable supply and any supply that would have been taxable if carried out in Belgium. Credit for VAT paid is also given in respect of certain exempt transactions, e.g., exports and intra-Community supply of goods (also referred to as zero-rating). However, most exempt transactions do not entitle the supplier to credit for VAT incurred, and, therefore, the underlying VAT represents a cost.
The principal mechanism for collecting the tax requires the supplier (called a taxable person) to charge VAT on the goods r services supplied, to take credit for VAT paid on business expenditure, and to pay the net tax over to the authorities. However, for some transactions, e.g., the intra-Community supply of goods, the recipient of the supply of goods is
required to account for the VAT due, rather than the supplier.
Special rules allow the recovery of VAT incurred by foreign
enterprises in Belgium if the VAT is referable to the making of supplies outside Belgium.
22. Inheritance and Gift Taxes
The inheritance taxes payable by the heirs are based on the net amount inherited from the deceased by each heir, and not on the total value of the deceased estate. The rates of tax payable by each heir vary according to the degree of relationship with the deceased, and increase progressively with the amount inherited. The tax rates vary from 3% to 30% for direct lineal inheritance, and from 30% to 80% in other situations.
The higher rates apply to the upper slice?of the amount inherited, not to the whole amount. There are minor statutory exemptions, the amounts depending on the relationship to the deceased, on which no tax is payable. Gifts of real estate located in Belgium, or personal property wherever situated, made by a resident individual to another person are subject to a gift tax at the same rates as those applicable to inheritances. The tax is only payable if the gift is made by a notarial instrument (which will always be the case when real property is transferred), but there are provisions for including in the estate untaxed gifts made in anticipation
of death.
23. Taxes on Payrolls (Social Security)
Belgian social security benefits are as follows: unemployment relief, family allowances, sickness and disability payments, medical benefits, vacation allowances, and old-age pensions. All employees are compulsory members with the exception of temporary workers qualifying for exemption under reciprocal social security treaties. Contributions are payable in part by withholding from employees?remuneration and in part by the
employer. The current monthly premiums are calculated as follo
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