- End of the Emanation Theory: Following the Digipolis ruling, Belgian intermunicipal associations can no longer automatically rely on the “emanation theory” to derive non-taxable VAT status from their member municipalities when providing services for consideration.
- New 2027 Framework (Circular 2026/C/81): Effective 1 January 2027, each association must independently assess its own VAT status—either by demonstrating it directly acts as a “public authority” or by qualifying for the “independent group of persons” (cost-sharing) exemption to maintain VAT-free services.
- Broader Impact & Immediate Action: The changes potentially affect other public cooperative bodies (such as autonomous municipal/provincial enterprises), requiring affected entities to urgently re-evaluate their tax status, input VAT deduction rights, member funding flows, and potential VAT adjustments on existing investments.
Source RSM
See also
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