The sharing economy: the VAT aspects

Transcription

1 Newsflash The sharing economy: the VAT aspects Previously, we discussed the new income tax regime for income from the sharing economy. However, engaging in activities in the sharing economy also has VAT implications. In this article, we reveal the VAT aspects. The sharing economy refers to goods and services that are shared, exchanged and sold between individuals. Often, this is done via online platforms such as kapaza, thuisafgehaald.be, Airbnb, Uber and others. A quick recap: the income tax regime Individuals who provide services to other individuals and receive income from that activity pay just 20% tax on that income, provided they only offer the services on a recognised online platform. Furthermore, they can deduct a fixed amount of 50% of their professional expenses, reducing the effective tax rate to just 10%. The scheme only applies to people earning income of no more than EUR 5,000 (indexed) in this way. For 2016, the threshold is EUR 2,500 because the scheme only took effect on 1 July. VAT rules This scheme also has implications for VAT. Basically, natural persons who are active in the sharing economy do not require a VAT number if they are eligible as a small enterprise for VAT purposes (turnover threshold below EUR 25,000). This means that a natural person active in the sharing economy does not have to charge VAT on the services he provides. He does not have to register for VAT and does not require a VAT number, nor does he have to submit VAT returns or a customer list. Conversely, this does mean that he cannot deduct the VAT he himself pays. NB: an individual in the sharing economy is therefore not entirely the same as a small enterprise, which is required to have a VAT number. A whole host of other conditions also apply, some of which overlap with the conditions applicable to income tax:

2 The services must take place in Belgium. The service provider may not render the same services as part of his usual economic activity (e.g. a chef who has a restaurant and also delivers meals to people s homes via a platform = excluded from the scheme). The natural person may only offer the services via an electronic platform which also handles payments. Moreover, he may only provide those services for other individuals, who use them solely on a personal basis. Services provided for a taxpayer who uses them for his economic activity are therefore excluded. The maximum turnover is EUR 5,000 (indexed) per calendar year. The gross amount of income is the basis for determining turnover. In other words: the amount paid or allocated by the platform, plus the amount deducted by the platform itself for its own services (commission). In exceptional cases, this threshold may be exceeded by no more than 10%. NB: this tolerance only applies to VAT and not income tax. Tax inspector is now allowed to view data you store in the cloud You undoubtedly know that, when the tax inspector comes knocking, you are required to allow him access to all the documents necessary to determine the amount of your taxable income. This includes data you keep digitally on your computer or server. The Programme Act of 1 July 2016 went further, allowing officials access to data you keep externally in the cloud. Inspector is allowed access to documents If, as a taxpayer, you receive a visit from an inspector, you must allow access to your books and records if the official requests this. It makes no difference whether or not you are subject to personal income tax, corporation tax, legal entity tax or non-residents tax. This obligation applies to all taxpayers. You do not, of course, have to present documents of a personal nature, but you do have to present all the (professional) books and records that are needed in order to determine the amount of your taxable income. VAT inspectors may also request access to the books, invoices, copy invoices and other documents of copies thereof. What about electronic data? Nowadays, however, taxpayers often keep these documents on a computer or server. Tax officers are already allowed access to these electronically stored documents. In the meantime, however, the technology has evolved further. Electronic data are no longer stored (solely) on the taxpayer s computer on his desk. Increasingly, the data are kept on a server. And even that server need not be physically on the taxpayer s premises. It may be external, so the data may simply be stored in the cloud. Indeed, this routine practice has now become the norm. The books and records in the cloud also constitute substantiating data for tax-related matters.

3 Access to the cloud To ensure that officials right of access keeps pace with this development, the Programme Act of 1 July 2016 amended Article 315bis WIB92 - which regulates the right of access - by adding that the obligations detailed in this article (= keeping and allowing access to the documents) also apply if the data requested by the authorities are located in Belgium or abroad in digital form. In other words, the inspector is also allowed access to data in the cloud. A similar change was made to the VAT Code, giving VAT officials the same authority. From when? The new measure has applied since 14 July Destination document to prove intra-community supply An intra-community supply (ICS) is exempt from VAT. This is because the tax will be payable in the country (another EU Member State) where the intra-community acquisition (ICA) is made. However, the supplier must prove that the goods were effectively sent abroad, which isn t always easy. In light of this, the VAT authorities now also accept a destination document as proof. VAT exemption for intra-community supplies An intra-community supply is the supply of goods from Belgium to another Member State of the European Union. An ICS is exempt from VAT in Belgium. On the flip side, an intra-community acquisition is an acquisition made in another Member State. An ICA is taxed in that Member State at the standard rates in that country. To qualify as an ICS/ICA, a number of conditions must be met: 1. the goods are supplied by a taxpayer acting as such, 2. the recipient is a taxpaying or non-taxpaying legal entity acting in that capacity, 3. that is established in another EU Member State, 4. and is required in its Member State to levy VAT on ICAs and 5. the goods are sent or shipped from Belgium to the recipient s Member State by or at the expense of the buyer or seller.

4 How is an ICS/ICA proved? The burden of proof on the Belgian supplier is twofold. He must demonstrate that the buyer is required in his Member State to make a taxed ICA and that the goods were effectively sent to the other Member State and therefore left the country. Proof 1: the buyer is required to charge VAT on ICAs in his Member State. The tax authorities consider this proven if the seller has a valid VAT number from his buyer that was issued by a Member State other than Belgium. Proof 2: the goods were sent or transported to the buyer s Member State and are no longer in Belgium. There are various kinds of documents that the buyer can use to demonstrate this, including contracts, purchase orders and shipping documents. No proof = no exemption If the seller cannot prove that the buyer is making a taxed ICA in his country and that the goods were sent to the other Member State, the exemption may be refused, meaning that the seller will have to pay VAT here. A simpler alternative: the destination document The tax authorities have listened to the complaints of taxpayers that the proof (e.g. by means of a shipping document) is sometimes very difficult to provide. So, on a trial basis, they have introduced a new, simpler form of proof: the destination document. The destination document is drawn up by the seller and confirms that the goods supplied are in the possession of the buyer in another EU Member State. As a minimum, the document contains the following information: seller s name, address and BE number; the buyer s name, address and VAT number issued by a Member State other than Belgium; confirmation of the arrival of the intra-community supply; the arrival location of the goods supplied (Member State, town or city/municipality); the month and year of receipt of the supplied goods; the period covered by the document; a description of the goods supplied; the price in euro (excl. VAT) of the goods supplied; a clear reference to the sales invoice. The buyer must confirm the accuracy of this information within three months of the end of the period covered by the document. He writes his name, date and signature and the words Received for... on the destination document. The destination document is a means of proof that is presumed to be correct if the seller 1. can guarantee that he is able to present the necessary documents should the tax authorities request them (sales invoice, proof of payment, shipper s invoice), 2. has submitted an intra-community listing for the goods concerned and 3. he has ensured that he has not become involved in tax fraud (insofar as it is reasonably possible for him to do so).

5 If you have any questions or comments, please feel free to contact our office! The DRT team DRT & Partners Aarschot Grote markt Aarschot +32 (0) (0) Wemmel Romeinsesteenweg Wemmel +32 (0) (0) drtpartners@drtpartners.com