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VAT increase as of 1 October 2012

Last updated: 21-09-2012

21 September 2012

As of 1 October 2012, the general VAT rate will be increased from 19% to 21%. This VAT increase will be applicable to all VAT-taxable transactions performed on or after 1 October 2012.

In this news item we want to inform you shortly about the VAT implications of the aforementioned VAT increase as of 1 October 2012.

What are the effects of the VAT increase?

The VAT rate increase will imply an additional cost for private consumers. Furthermore, the VAT increase will also increase the costs for entrepreneurs who perform (fully or partially) VAT exempt activities.

Entrepreneurs performing (fully or partially) VAT exempt activities could decide to re-charge this VAT increase to their client. In that case, the VAT increase will be quite neutral. If you are an entrepreneur who provides (fully or partially) VAT exempt activities and you will not charges these additional VAT costs to your clients, the VAT increase will imply a real increase of your costs.

When is the increased VAT of 21% applicable?

According to the transitional rules it is important to check at which moment the activities (supplies or services) are performed. Basically, this means the following:

  • In case supplies and/or services are performed before 1 October 2012, the VAT rate of 19% is applicable;
  • In case supplies and/or services are performed on or after 1 October 2012, VAT rate of 21% is applicable;
  • Is case of continuous activities (e.g. a service) that will be performed before and after 1 October 2012, it is noted that the old rate of 19% applies to the part of the service performed before 1 October 2012 and the new rate of 21% on the part of the service performed after 1 October 2012.

If you are an entrepreneur for VAT purposes and you sent invoices to your clients including VAT, it is important to take the VAT increase into account at the moment of invoicing. In addition, you must also take care that your accounting software is able to accommodate this VAT increase.

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