You still need to go through a few steps to start your business. One of them is to request your VAT number. However, do you really have to pay VAT? Wouldn’t it be more interesting to ask for the VAT exemption regime for small businesses? Discover a ready-made answer in this article.
Are you subject to VAT or not?
The answer is probably yes. Anyone who supplies goods or services and almost all self-employed people are subject to VAT.
Because we live in Belgium, there are exceptions. Your activity may be “exempt” from VAT, which is called “Article 44”. This is the case, for example, of a doctor or a physiotherapist.
What is the difference between the VAT exemption and the VAT exemption scheme for small businesses?
In the case of a “VAT exemption”, you fall under the VAT Code. However, this code provides for an exception to article 44. This exemption is not a free choice: you are exempt or you are not. Anyone exempt under Article 44 is not required to pay VAT. Using the self employment tax calculator is important in this case.
Those who do not fall under section 44 can opt for a special scheme for small businesses. This means that you can be exempt from certain administrative formalities. This means that a large part of the VAT obligations do not have to be fulfilled. You must apply to the VAT office to obtain this regime. To do this, you can submit a request for VAT activation, in which you indicate that you want to benefit from the VAT exemption scheme for small businesses.
The small business VAT exemption scheme is a free choice. To be eligible, you must meet certain conditions in terms of turnover and activities.
- Requesting a VAT number is compulsory, even if you opt for the VAT exemption scheme for small businesses.
- If you do not opt for the small business VAT exemption scheme, you must file a VAT return monthly or quarterly.
- If you use the VAT exemption scheme for small businesses, you cannot reclaim the VAT you pay yourself.
- To calculate your turnover, take into account the turnover of a full year. If you don’t have a full year behind you, the State will recalculate your turnover
- According to this formula: Your annual turnover = number of active days x 25,000 € / 365.
The small business VAT exemption scheme does not exempt you from the rest of the red tape. You still have to fulfill the following obligations:
- Declaration of start-up, modification and termination of your activity.
- Mention on your invoices “Small business subject to tax exemption.
- VAT not applicable.
The annual list (listing) of your taxable clients and the total turnover you achieve under the exemption regime. In some cases, this listing is not mandatory.