Right to VAT deduction after the expiry date: circular clarifies scope of Biosafe ruling in Belgium

The right to deduct VAT arises at the moment the VAT becomes payable and is, in principle, exercised immediately (i.e., in the same tax return period in which the right to deduct VAT arose).

Under the European VAT Directive, Member States may deviate from this rule. Belgium does so by stipulating that the right to deduct VAT may be exercised in a periodic VAT return submitted before the end of the third calendar year following that in which the deductible VAT became payable.

In the Biosafe ruling, the Court of Justice ruled that if a supplier issues a corrective invoice years after the date of the original invoice and this results in an additional amount of VAT that was not originally charged, the customer is still entitled to deduct the additional VAT charged, even if the standard expiry period has expired.

Circular 2025/C/23 imposes the following conditions, which would allow the taxable purchaser to exercise the right to deduct VAT after the expiry date:

• The supplier or service provider has issued a corrective invoice charging an additional amount of VAT that was not included in the original invoice (for example, due to the initial incorrect application of a reduced VAT rate).
• The material and formal conditions for exercising the right to deduct VAT are only fulfilled at the moment the correction is made. Specifically, this means that the customer can only deduct the VAT as from the moment he receives the corrected document, even if the normal expiry date for VAT deduction has already passed.
• Objectively speaking, the customer could not exercise his right to deduct VAT earlier, because he had not received the corrective document before the expiry date. However, this does not apply if the customer has acted negligently (such as failing to act while knowing or should have known that an additional amount of VAT was due).
• There must be no fraud, abuse or collusion between the supplier and the customer.
• The risk of non-payment of the additional VAT by the supplier or service provider must be excluded. This means that the supplier must have actually paid the additional VAT to the Treasury. Although the customer does not have to check this at the time of deduction, the tax authorities may intervene retrospectively if it becomes apparent that the payment has not been made.

Obviously, the effect of the Biosafe ruling is limited to the additional VAT amount that had previously been wrongly not charged. Regarding the VAT initially charged, the standard expiry period continues to apply. In other words, if the customer has not exercised their right to deduct VAT on the amount initially charged within the standard expiry period, they irrevocably lose their right to deduct VAT on the amount initially charged.

If the above conditions are met, the customer can only exercise their right to VAT deduction after the expiry date in the monthly or quarterly VAT return relating to the period in which the corrective document is issued to the customer. If the customer fails to do so, the circular explicitly states that the customer can no longer apply for VAT deduction on the basis of the Biosafe ruling (due to the fact that the customer was not in an objective impossibility to exercise the right to VAT deduction).

Taxable customers who exercise their right to deduct VAT based on this circular must inform the VAT authorities of this in writing by including the following information in the “Comments” section of the electronic VAT return:

• The amount for which the customer is claiming the additional VAT deduction;
• The number of the corrective document or, in the event of cancellation of the original invoice, the number of the credit note and the number of the newly issued invoice;
• The specification “Application of Circular No. 2025/C/23 or 28.04.2025”).

This circular offers taxpayers the opportunity to exercise their right to VAT deduction in specific cases where, objectively speaking, VAT could not be deducted earlier, even after the standard expiry period has passed. However, be vigilant, as the circular shows that the Belgian VAT administration interprets this case law very strictly.

Are you unsure whether your company is eligible to exercise the right to VAT deduction after the standard expiry period? If so, please contact your account manager.