VAT credit: loosening for starters

When you have to get VAT back from the tax authorities, you need to have some patience. A VAT credit is as a general rule only paid back after a period of 3 months. In order not to put starters in financial problems, they can obtain, as from 1 January 2020, the repayment of their VAT credit after one month during the 2 first years of their existence.

From 3 months to 1 month

When you are an entrepreneur, then you know it: VAT returns should be filed by the 20th of the month following the month or quarter to which the VAT return relates. In case you have a VAT refund position, you can leave the amount on the current account so you have an advance for the next return.

But you can also opt for a repayment of the VAT credit. Under the normal refund procedure, the refund period (the period to which the refund relates) is in principle 3 months. Irrespective whether you file monthly or quarterly VAT returns, you can apply for VAT refund in the VAT returns you file in April, July, October and January. The maximum refund period (being the period after the period to which the return relates, after which the VAT credit is actually repaid) is also 3 months.

However, one exception exists: accelerated refund is possible for VAT payers filing monthly VAT returns and having at least a 30% VAT exempt turnover or turnover subject to reduced VAT rates. Additionally, it is required that the VAT payer had a VAT credit of at least 12.000 during the previous calendar year. This accelerated refund holds that the refund period to which the refund relates is one month, and the refund period is two months.

New exception: starters

A royal decree of 29 August 2019 has added a new case for which the accelerated refund is possible, namely the starters.

As from 1 January 2020, starters can benefit from a monthly refund procedure, but only for VAT credits relating to a period of 24 months following the start of the economic activity.

What are the conditions?

First the VAT payer should file monthly VAT returns. VAT payers filing quarterly VAT returns are excluded from the new scheme. In case a starter opts for quarterly returns, the period to which the refund relates is the previous quarter. The Minister promised that in such case the VAT authorities will try to actually repay the VAT credit within two months following the quarter to which the refund relates ... as far as possible.

The starter should also file its VAT returns electronically. You should definitely file your VAT returns electronically ... except when you can prove that you do not have the necessary equipment. But for the accelerated refund the VAT returns should be filed electronically, without exception.

The minimum amount of the accelerated refund is 245.

Do you have to do something?

As a general rule, the accelerated refund is only possible in case the head officer of the competent VAT office grants an authorization. But for the accelerated refund for starters no authorization is required. That does not mean that you do not have to do anything ... you still have to indicate in your VAT return that you want to obtain the VAT refund.