PwC “delighted” at publication of VAT grouping Royal Decree

The Royal Decree on VAT grouping in Belgium was published in the Belgian official gazette on 15 March 2007. The new legislation will be effective as from 1 April 2007. VAT experts at PwC are delighted at the contents of the text and its timely publication in the official gazette. The new legislation is an important step forward in Belgium’s efforts to improve its competitive position and increase employment.

Under the VAT grouping rules, taxable persons that are sufficiently linked with each other, such as groups of companies, are treated as one single taxable person for VAT purposes. Transactions between entities belonging to the same group used to fall within the scope of VAT. When forming a VAT group, these intra-group transactions will not fall into the scope of VAT anymore. Today, in the current global economic climate, groups decide more and more in favour of centralizing their back office activities within so-called ‘centres of excellence’, so that VAT grouping became a necessary step for Belgium to stay competitive.

Ine Lejeune, Partner with PwC and Global Indirect Tax Network Leader, who was involved in the development of the VAT grouping concept from the outset, comments: “Along with the notional interest deduction, VAT grouping contributes to Belgian businesses becoming more competitive and to a growth in employment, as head office functions and group functions are being increasingly organised in ‘centres of excellence’. It becomes less attractive for businesses to “delocalize”. With this concept of VAT grouping, Belgium has chosen for an option geared for the future that closely fits the ongoing emergence of a Belgian “knowledge economy”. This Royal Decree is an excellent example of ‘tax best practices’ in Europe and all across the world”, Ine adds.


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