Draft: VAT deduction according to the general ratio or taking into account the actual use of the goods and services

• The law of December 27, 2021 containing various provisions on value-added tax has changed the procedure for exercising the right to deduct VAT based on the actual use of goods and services or a portion thereof, as provided for in Article 46, § 2, of the Code.
• This principle means that the taxpayer exercises their right to deduction according to the normal rules applicable to a taxpayer with full deduction rights for the goods and services that are exclusively intended for the sector that grants deduction rights.
• It also means that deduction is excluded for goods and services that are exclusively intended for the sector that does not grant deduction rights.
• Finally, for goods and services used simultaneously in both sectors, the taxpayer must establish special ratios based on their use.
• The new procedure consists of a simple prior electronic notification.
• The administration no longer needs to grant prior approval but retains the possibility to object to the exercise of the right to deduction based on actual use or, if applicable, against the criteria used by the taxpayer in that deduction method.
• The Royal Decree of October 26, 2022 sets out the modalities of this new procedure.
• The amendment to Article 46, § 2, of the Code aims to simplify the procedure for choosing that deduction method and to allow the administration to verify whether taxpayers apply that deduction method correctly, particularly through prior notification and the provision of additional information via periodic VAT returns.

Source Draft project of law

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