Proposition 53K2450

Projet de loi modifiant le Code de la taxe sur la valeur ajoutée (I).

General information ¶

Submitted by

PS | SP the Di Rupo government

Submission date

Oct. 18, 2012

Official page

Visit

Status

Adopted

Requirement

Simple

Subjects

VAT EC Directive electronic document invoicing indirect tax

Voting ¶

Voted to adopt

CD&V Vooruit LE PS | SP Open Vld MR

Voted to reject

∉ N-VA VB

Abstained from voting

Groen Ecolo

Party dissidents ¶

• Peter Luykx (CD&V) voted to reject.

Contact form ¶

Do you have a question or request regarding this proposition? Select the most appropriate option for your request and I will get back to you shortly.

Discussion ¶

Nov. 28, 2012 | Plenary session (Chamber of representatives)

Full source

I would like to refer to the written report.

I am pleased to accept your referral to the written report.

Applause from all banks.

Ms. Wouters has the word.

Mr. Speaker, before the summer holiday, the Government announced the transposition of the Second VAT Invoicing Directive, which will allow the removal of legal restrictions on electronic invoicing, which is a good thing for reducing the administrative burden of companies.

However, the draft law strongly interferes with the current rules on the time when VAT is due, which has nothing to do with the transposition of the provision of the Second Invoicing Directive. For some groups this works well, for one group a little less.

For utility companies and telecommunications companies, this is ⁇ interesting. From 1 January, VAT will only have to be paid to the Treasury after the consumer has paid VAT to the Electrabels, Belgacoms and other utility companies of this world. The collection system then applies if these large companies issue their invoice to a private person. That group of undertakings will therefore be able to enjoy, however from the VAT point of view, an optimal cash flow approach. I will give an example. If a customer pays his invoice today, November 27th, the companies can still keep VAT until December 20th. The private individuals will thus even more than now finance the operating capital of those utility and telecommunications companies. This is the first group for whom this bill is positive.

Also for a second group, the VAT payers who usually provide goods and/or services to individuals, it is an excellent case.

However, there is a slight panic among large and small VAT liable enterprises over the unclearness of the new rules and everything related to advance invoicing, as the new rules of cancellation are a major turning point because the advance invoicing until now made the VAT cancellable and at the same time deductible from the buyer.

If today, 28 November, a monthly declarer issues an advance invoice, he will have to pay the VAT on 20 December, but the VAT liable customer can deduct the VAT from the VAT he still has to pay on 20 December, thus within the same taxable period. However, from 1 January 2013, VAT will no longer be due at the time of issue of the advance invoice, but at the time when the delivery or service is performed or at the time of collection if it precedes it. Therefore, the major question arises among VAT payers whether they can still issue that advance invoice with VAT.

In the committee, I asked for clarification on this subject and I felt very sorry that you were not present at the time, Minister Vanackere. It was Secretary of State Bogert who had to speak to us.

The State Secretary’s response was that an advance invoice is still possible, but that VAT is no longer due. However, VAT may still be indicated on an advance invoice. So it can still.

You could expect this answer to satisfy me, because it is brief and clear. Well, this answer is to the letter of the law a financial catastrophe for companies. It is a financial fraud due to the pre-financing of the VAT resulting from this. I will try to clarify this with the following example. If an enterprise issues an advance invoice today, it must pay VAT on 20 December. A monthly declarer can deduct VAT from the VAT he must pay on 20 December. There is no pre-financing between the two. One taxpayer pays VAT to the Treasury on 20 December and the other deduces VAT on 20 December.

As is now the case, the pre-financing of VAT is zero. However, as a result of this legislative change, this will no longer be the case from next year. If on 28 January a VAT liable person issues an advance invoice with VAT, he must pay that VAT on 20 February. The buyer will only be allowed to deduct VAT after he has paid VAT to his supplier.

Assuming that the buyer pays the advance invoice with VAT at the beginning of February, the monthly indicator will be able to deduct the VAT from the VAT he must pay by 20 March. Between those two, the VAT will suddenly have to be pre-financed for a month, since the supplier must already pay the VAT by 20 February, while the buyer can only deduct the VAT on 20 March.

The government thus causes a negative cash flow, in full financial and economic crisis. I can hardly call this bill a relance measure. The reason is in a provision against fraud. Everyone knows that VAT is fraud sensitive. The VAT Code therefore contains provisions aimed at combating fraud. According to one of those fraud clauses, VAT is owed by any person who indicates VAT on an invoice, even if he has not delivered goods or provided a service. It is therefore clear in the explanatory note that he becomes a VAT debtor at the time of issuing the invoice.

The buyer will only be allowed to deduct the VAT after it becomes due. This is according to the bill, contrary to what is currently applicable, at the time of payment of the advance invoice. I quote again State Secretary Bogaert, who is very formal about this in the report: “The fraud provision is by no means a specific cause of tax liability. It is primarily intended to give the Treasury the right to collect from anyone, merely because he states an amount of VAT on an invoice or a document valid as such, the VAT paid to him.”

Colleagues, you may have heard it, there is clearly a difference between the memory of explanation and the answer of State Secretary Bogaert to our question.

Whoever issues an invoice with VAT, according to the memorandum of explanation, becomes a VAT debtor at the time of issuing the invoice. Only because of the fact that a VAT amount is indicated on an invoice, the Treasury can collect VAT, but State Secretary Bogaert adds the words "which was paid to him". For the sake of clarity, “he” means the person who issues the invoice with VAT.

Let us translate this to the example: if on 28 January a VAT liable person issues an advance invoice with VAT, which is paid at the beginning of February, then the VAT must be paid not by 20 February, but according to the explanatory note by 20 March. In other words, you can solve the cash flow delay in five words.

The problem, however, is that these five words are not in the law, but in the report attached to this bill.

Because companies, especially in these times, want legal certainty, we are therefore submitting an amendment to this fraud provision. Our amendment aims only to solve the problem of pre-financing of VAT in advance invoicing. We do not want to go as far as State Secretary Bogaert, who limits the fraud provision to the invoices whose VAT has been paid by the customer. In our view, the treasury of the person who lists VAT on false invoices should be able to claim it regardless of whether the co-contractor paid the fraudulent VAT or not.

Mr. Minister, if you want to go so far, that cash flow problem has already been solved, but then there is still a serious problem. The change of the time when VAT becomes due will increase the administrative burden related to the advance invoicing significantly.

Again, the buyer can only deduct the VAT after it becomes due, but there is another condition. The buyer must in fact be in possession of a regular invoice and therefore on it must be indicated, among other things, the date on which the VAT becomes due.

In case of an advance invoice, you are in trouble, Mr. Minister. For example, if you issue an advance invoice to a VAT liable on 28 January with VAT paid at the beginning of February – let us say on 4 February – that date should be on the advance invoice. However, it is quite difficult for a supplier to know that in advance. After collecting, he would have to issue an amendment with the indication of that date, so that his client is sure that he can subsequently deduct that VAT. As you know, anyone who incorrectly deduces VAT, even without fraudulent intent, is exposed to an administrative fine and negligence interest that you have recently doubled. The law is clear about this. Moreover, the VAT Directive leaves very little space on this point. Even though VAT payers may now be allowed to invoice electronically and to prepare an improvement document electronically, this still constitutes an additional administrative burden. The ability to do this electronically will save companies only paper and stamps, not more or less.

Therefore, it is also suggested that from 1 January 2013 no longer work with an advance invoice but with an invitation to pay. Once the payment is received, the actual advance invoice will then be issued. However, there is a problem. Accounts are not provided for this at the moment. In large enterprises, ERP software is also not provided to work in this way. Per ⁇ the problems with the ERP software are even greater because it usually works with a chain of operations. A double flow of documents for the advance invoices will require these companies to make serious adjustments to those systems. It is therefore regrettable that I am receiving so many signals from the practice about how this law should be applied in practice.

Software vendors and large companies are already looking to prepare the necessary adjustments to that software, as this law comes into force on 1 January 2013.

Those we should not forget are the thousands of accountants. As a result of the current bill, they will have to work under much more stress. During busy periods of VAT declaration, they will not only have to update the purchase and sales journal, but they will also have to update the financial journal in order to be able to submit a correct VAT declaration. In busy periods it will therefore be a little more busy for those people than it is now. Just keeping a financial diary is usually postponed to a quieter period, when possible.

In addition, accountants will also need to spend much more time on matching VAT turnover with accounting turnover. In principle, these two numbers should match each other, but as VAT no longer becomes taxable by issuing an invoice, it will be much more difficult to reconstruct an advance invoice from the payments and to include it in the VAT reporting.

Since that second VAT invoicing directive does not require our country to amend the rules of invoicability, we therefore regret deeply that no more time is taken to better capture the effects of advance invoicing. Software manufacturers, digital practitioners and VAT payers are still in the dark, because they do not know how to organize the advance invoicing.

If I am correct, today is November 28th. There will be a month before this legislation comes into force. There is also Christmas between. Mr. Minister, therefore, I suggest that this be reviewed thoroughly before it is approved. There is a serious problem with advance invoicing. Please put your ear to listen to the accountants so that they can get certainty.

Finally, we submit an amendment that provides for a transitional measure. We want to give absolute certainty to our VAT payers. If they still issue an advance invoice this year, the VAT of which becomes taxable, by our amendment the VAT will not be taxable a second time when it is paid in 2013.

We are also convinced that electronic invoicing can significantly reduce the burden for companies, but the adjustments to the taxability take away all the benefits. We cannot agree with this bill.

I ask you again to listen very closely to the VAT payers and to the accountants, because I think this will be very difficult for them before 1 January.

State Secretary Bogaert said in the committee that a transition period would be introduced. The question is, therefore, what that transitional period means, where it is stated in the law and whether everyone will be informed of this change in a timely manner.

Mr. Speaker, Mr. Minister, I would like to say a few words about this bill, which is a transposition of a directive containing on paper interesting elements in terms of automation of VAT procedures, electronic invoicing. In some cases, this may improve the cash situation of companies, as VAT will be due after payment and not after issue of the invoice or delivery. This will be more relevant to the economic cycles.

In fact, it seems to me that in various places things have been excessively complicated, in particular by choosing to allow two VAT systems to co-exist, namely the provision or delivery, on the one hand, and the payment, on the other. There will be coexistence of two systems. It therefore seems to me that the intention is that this new system will be applied on 1 January, that there is a gap in the coordination of the economic sectors concerned, but also of the service providers for which adjustments in accounting software and procedure will be necessary.

This will be even more difficult for the smaller structures and this could justify, Mr. Minister, a shift in the time of the entry into force of this new arrangement. I do not think that this is considered at this stage by the government, but the fact of legislating so late in the year, with an entry into force on 1 January, seems to us actually problematic.

Mr. Speaker, I would like to remind the plenary session that some of Ms. Wouters’ considerations do not relate to the actual purpose of the conscious directive. When we later allow the electronic formula to gain a value that can exist in addition to the paper formula, we are making progress, as the implementation of the directive will save the industry several tens and even hundreds of millions of euros.

I have been able to emphasize something again in the committee. We, the Belgians, send together about 1 billion invoices each other each year. In fact, the vast majority of the invoices are based on information produced electronically and of course available electronically. However, the electronic information is then massively put on paper due to the current rules of evidence, after which in very many situations the paper reality is undoubtedly again electronically converted by the destination. By putting an end to these practices today, we will make a major step forward in reducing the administrative burden.

As much as I would like to comment on Mrs. Wouters’ considerations on the question of demandability and on Mr. Gilkinet’s comments, let us not forget what we are doing here today. We save here today many tens of millions of euros, if it is not several hundreds of millions of euros. After all, while today a small percentage of invoicing is done electronically, today we ensure that electronic invoicing will be possible in large numbers in the future.

The comments of Ms. Wouters concern the modification of the rules of claimability. They also have to do with our country’s choice of the cash accounting system, an option that could have been followed in accordance with the Directive. Both questions deserve an answer.

The draft law, of course, aims to reflect as accurately as possible the wording of the amended articles of the VAT Directive in the VAT Code. The acquisition resulted in the rewrite of other articles of the code in order to be more consistent with the VAT Directive.

I do not know whether the speakers referred to this, but, in addition, the judgment of the Court of Justice, namely the judgment of 21 February 2006, BUPA, had to be taken into account, specifically with regard to the taxability of taxes. That judgment, in fact, clarifies that a tax can only become taxable on the taxable event if the price or part of it, i.e. the advance, is received before that date. That provision has the effect that the issuance of the invoice before the taxable event of the tax cannot, in itself, constitute a cause of VAT liability, since no provision of the VAT Directive provides for that possibility.

Both issues must be read together. I may be accused of not resorting to the possibility provided by the Directive, namely to choose a cash accounting system. I will answer this question in the second part of my reply. However, I should not be asked to submit a bill that does not take into account the judgment of the Court of Justice.

The fact that the issuance of the invoice before the taxable fact of the tax cannot in itself be a cause of taxability means that we cannot do otherwise than to abolish the old article 17, § 1, paragraph 2 of the Code.

Then we get to the cash accounting. This means that the right of deduction of the taxable person subject to that scheme will be postponed until he has paid VAT to his suppliers. At the same time, the applicability of VAT on its outgoing transactions is postponed until payment by its customer.

However, an extension of the cash accounting scheme to business-to-business transactions would ensure that the tax not only becomes taxable when the customer pays, but also that the customer can exercise his right to deduction only at the moment of payment. This would lead to a number of administrative difficulties. For example, the supplier would have to indicate “cash accounting” on its invoices, so that his customer knows that his right to deduction is postponed until payment. The customer should therefore maintain separate accounting for those invoices, as their treatment would differ from invoices without cash accounting. In other words, this is a complex arrangement, colleagues.

Due to the complexity of such a scheme, which is absolutely contrary to all of our ambitions of administrative simplification, we have chosen not to use them.

Finally, I would like to correct two points that I picked up from Ms. Wouters’ discourse.

Mr Wouters, first of all, you must remember that the VAT on the advance invoice also does not have to be paid by the supplier. Secondly, in your argument, you should not forget that the fraud measure is invoked only by the administration in the event of a suspicion of false invoices.

The combination of those considerations leads me to decide, Mr. Speaker, dear colleagues, that I may ask the Parliament to approve the draft without taking the amendments of, among other things, Mrs. Wouters’ Group. I believe that the adoption of the draft has indeed made a fairly substantial progress towards a better electronic regulation of VAT obligations. I think many companies will be grateful for this.

Mr. Minister, do not misunderstand me. We fully agree with the transposition of the Second VAT Invoicing Directive, which will remove all legal restrictions on electronic invoicing. It is true that this will in part lead to a significant reduction in the administrative burden and we support that.

However, the draft law consists of two parts. In the second part, the provisions on the taxability of VAT are amended. In this regard, there is a problem when it comes to an advance invoice. If I understand you correctly, you argue that those who issue an advance invoice do not have to pay VAT immediately. Everything is postponed until the customer pays the advance invoice. In this case, the VAT becomes taxable, both for the person who issued the invoice and for the person who received it. This explanation was also given by State Secretary Bogaert, but it is not in accordance with the law.

Look at the law and the memory of explanation. It does not contain the same text as mentioned by State Secretary Bogaert. Therefore, we have submitted an amendment to Article 51, § 1, third. We see a problem there. I am probably not the only one who sees this way. I think you consulted the big four in the context of the VAT conversion, but they are not always engaged in practice. I have already received dozens of phone calls from accountants, VAT specialists and experts that there is still a problem with advance invoicing. It can be solved with a small adjustment in the law, making everything clear. However, as you say it now and it is now in the law, you will still have problems.