End-of-year tips 2025: VAT

Do you want to give your staff or business relations a small token of appreciation as the year ends? You must also take specific VAT rules into account regarding the VAT deduction for gifts and staff parties.

For business gifts, only one gift per calendar year per employee/customer with an amount lower than 50 euros (excluding VAT) is eligible for VAT deduction. For a gift of 50 euros or more, no VAT deduction is possible. There is no deduction whatsoever for tobacco products and spirits. Be careful with a gift consisting of multiple components, such as a bottle in a nice wooden box.

VAT on the costs of food and drinks during a staff party is, in principle, never deductible. However, if the company provides meals itself and the employees serve themselves, the tax authorities can reclaim the VAT on these meals. In that case, it is not considered a restaurant or catering service. Other costs related to a staff party are deductible under certain conditions according to the normal VAT rules.

As soon as the VAT becomes due as a result of a supply of goods or the performance of a service, the supplier/service provider is obliged to remit the due VAT amount to the Treasury via the periodic VAT return. However, at the end of the year, it may be noted that there are outstanding customer claims for which the due VAT has already been paid.

The VAT can be recovered as soon as it is definitively established that the claim is wholly or partially lost. The exact time at which a claim may be considered definitively lost is not specified by law. The burden of proof lies with the supplier/service provider: they must be able to demonstrate that they have exhausted all possible means of recourse to collect the claim before recovering the VAT.

A three-year limitation period applies to the refund of VAT on bad debts. Invoices issued in the 2022 calendar year that are considered definitively lost are still eligible for VAT recovery no later than 2025.

Note: In the event of an assignment of a claim, you must take various formalities into account. Specific VAT rules apply to which we can advise you further.

Year-end settlement between affiliated companies: is this the result of a performance and therefore subject to VAT, or is it a profit distribution or correction that falls outside the scope of VAT?

Following a recent judgment, the Court of Justice confirmed that Transfer Pricing corrections between affiliated companies can, under certain conditions, be considered remuneration for a service performed for consideration. If there is a direct link between the service provided and the consideration, contractually agreed profit margin adjustments can be considered remuneration for a service, and are therefore subject to VAT (Arcomet, C-726/23, point 49).

In 2025, the ‘6% for demolition and reconstruction’ scheme was adjusted again. Thanks to this change, the supply of a dwelling after demolition and reconstruction can again take place at the reduced VAT rate of 6%. In accordance with the other schemes, a correct declaration must be submitted in time for this.

When the new scheme came into effect, Form 111 was not available, and it was necessary to work with an invoice declaration provided by the administration. Form 111, which serves as the official declaration, is now available via MyMinfin, under the ‘my interactions’ tab.

The building owner/seller must submit the declaration, depending on the destination of the reconstructed dwelling:

• No later than January 31, 2026, for projects for which the VAT became due after June 30, 2025, and where the temporary tolerance was applied;
• Before the VAT becomes due for all new projects

As of January 1, 2026, electronic invoicing will be mandatory for every transaction between VAT-liable companies in Belgium.

Only invoices exchanged electronically – the so-called e-invoices – will be considered valid for VAT purposes. This means that both sending and receiving invoices must be done correctly (i.e., via an approved electronic network).

Companies that do not comply with this obligation risk fines: 1,500 euros for the first infringement, 3,000 euros for the second, and 5,000 euros for each subsequent infringement. A subsequent fine will only be imposed if the administration detects a new infringement at least three months after the previous finding for which a fine was already imposed.

Although e-invoicing is mandatory from January 1, 2026, the FPS Finance will apply a period of tolerance during the first three months of 2026. During this period, no penalties will be imposed for infringements of the new obligation, provided the company can demonstrate that it made timely and reasonable preparations.

However, some VAT taxpayers are exempted from mandatory e-invoicing: bankrupt companies and lump-sum VAT taxpayers do not have to send e-invoices.

Additionally, companies with exclusively exempt transactions and foreign VAT taxpayers without a fixed establishment for VAT purposes in Belgium are not obliged to send or receive e-invoices.

If you carry out transactions for which VAT is due and transactions that are exempt from VAT, you are a mixed VAT taxpayer. This means you do not have a full right to VAT deduction. The deduction must be limited based on a general ratio or according to the actual use.

During the first quarter or first 3 months of 2026, the general and special ratios calculated based on turnover must be evaluated based on the final figures for the 2025 calendar year. In case of excessive deduction, you must repay VAT, while in case of insufficient deduction, you may exercise an additional deduction. Keep the well-known 10% rule in mind if you have been working with a general or special ratio based on turnover for longer than 1 year.

Based on the budget agreement for 2026, no general VAT increase is expected. The VAT rate on non-alcoholic beverages in the hospitality sector (Horeca) and entertainment would decrease from 21% to 12%, which would make a soft drink consumption in a café cheaper. At the same time, certain products and services for the end consumer would become more expensive due to VAT increases on:

• Cultural activities, sports, and recreation, hotels, campsites, and take-away meals: from 6% to 12%
• Pesticides: from 12% to 21%

In addition, the Council of Ministers approved the draft Royal Decree to reintroduce the reduced VAT rate on the supply with installation of heat pumps. As of January 1, 2026, the rate of 6% will be applied again for a period of five years. The draft still has to be submitted to the Council of State for advice and will only be final after publication in the Belgian Official Gazette.

Submission VAT returns
Through this link you can consult the VAT calendar with all important deadlines to avoid penalties and interest.

Annual intra-community sales listings
In relation to 2025: to be submitted before 31.03.2026.

Annual client listings
In relation to 2025: to be submitted by 31.03.2026.

Foreign VAT refund request
In relation to invoices calendar year 2025: to be submitted by 30.09.2026.