In a B2B context services are considered to take place where the recipient of the services is established. However, for certain transport services the place of supply is determined based on the 'actual usage' of the services. This deviating place of supply rule (i.e. the 'use & enjoyment' rule) was amended with effect as of 23 November 2017 (Royal Decree No. 57, B.S. 13.10.2017).
Since 2010 as a general rule for services in a B2B context, the place of supply is located where the recipient of the services is established (or has its permanent establishment if the services are provided to this establishment). This also applies to freight transport services and related logistic services (e.g. loading, unloading, handling of goods, etc.). Transport and logistic services supplied to a Belgian recipient are consequently subject to Belgian VAT (except if an exemption applies). When these services are provided to a customer based in another EU Member State or outside the EU, no Belgian VAT is due. However, a European taxable customer has to self account for VAT via the reverse charge mechanism in its VAT return (except if an exemption applies). In other words, the place of the 'actual usage' of the transport (the place where the distances are covered) is not relevant.
There was one exception to the above. When these services take place 'outside the EU', Royal Decree No. 57 applied the rule of actual usage or so-called 'use &w enjoyment'. More specifically, the actual usage was taken into account and no VAT was due regarding distances covered outside the EU. For the part of the transport that took place within the EU, the general place of supply rule (i.e. where the recipient is established) remained applicable. This resulted of course in difficulties in practice where on the invoice the price had to be split up proportionally in function of the different VAT treatments.
As of 23 November 2017 this 'use & enjoyment' rule of Royal Decree No. 57 was amended and the criteria 'proportionate to the distance covered' was deleted. From now on, the following rules apply:
| Recepient | BE | Other EU country | Outside EU |
| Transport route | |||
| In BE | BE | Other EU country | BE |
| In other EU country | BE | Other EU country | Legislation of other EU country |
| Outside EU | - | Legislation other EU country | - |
| In and outside EU | BE | Other EU country | - |
These new places of supply rules do not have any impact on the application of the exemption for transport and logistic services related to the importation and exportation of goods (transport, loading, unloading, packaging, inspection, customs formalities, storage, etc.) following article 41, §1, 2 ° and 3° of the Belgian VAT Code. Of course, these exemptions can only be applicable if the place of supply is considered to be Belgium.
At the same time it should be noted that following a recent decision of the European Court of Justice a more narrow interpretation of these VAT exemption has been foreseen. These services are no longer exempted, if they are not provided directly to the exporter, importer or recipient of the goods. As a consequence, the subcontractors of these services can no longer apply the exemption and has to charge VAT if necessary. Administrative guidelines on this topic are being prepared by the Belgian VAT authorities.
Considering the above it is recommendable to review the VAT treatment of the transport and logistic services, both incoming and outgoing. By doings so, a company can avoid potential VAT risks such as claim of VAT or the rejection of the VAT deduction of incorrectly charged VAT, to be increased with penalties and interest for late payment.
We can assist you by performing a limited VAT review on the relevant incoming and outgoing transactions. Such VAT review can be performed during a meeting at which occasion additional information can be provided.
