VAT Exemption Scheme in Belgium: Threshold and Implications

The VAT exemption scheme is a Belgian tax arrangement that allows small businesses with an annual turnover not exceeding EUR 25,000 to avoid charging VAT to their customers. This scheme, set out in Article 56bis of the Belgian VAT Code, offers considerable administrative simplification, but it also has limits that need to be understood before you opt in.

What is the VAT exemption scheme?

The VAT exemption scheme (also known as the "small business scheme" or kleine ondernemingsregeling in Dutch) is an exception regime provided for by European directive 2006/112/EC (Articles 281 to 294) and transposed into Belgian law by Article 56bis of the VAT Code.

In practice, a taxable person under this scheme:

• Does not charge VAT to customers
• Cannot deduct the VAT paid on business purchases
• Does not file periodic VAT returns (neither monthly nor quarterly)
• Must nevertheless file an annual listing of taxable customers

It is therefore a simplified regime, particularly suited to self-employed people working as a secondary activity (indépendant complémentaire), starters and small, low-turnover activities.

The EUR 25,000 threshold: how is it calculated?

The turnover taken into account

The EUR 25,000 threshold is assessed on the basis of annual turnover excluding VAT. The calculation includes:

• Supplies of goods and services that would be subject to VAT if the taxable person were under the normal scheme
• Transactions exempted under Articles 39 to 42 of the VAT Code (exports, intra-Community supplies)

Transactions excluded from the calculation

The following are not counted towards the EUR 25,000 threshold:

• Disposals of tangible or intangible capital assets
• Exempt property transactions (Article 44, para. 3 of the VAT Code)
• Transactions exempted under Article 44 of the VAT Code (medical services, education, etc.)
• Insurance indemnities and subsidies not linked to price

Concrete calculation example

Marie, a graphic designer working self-employed as a secondary activity in Namur:

• Graphic design income: EUR 18,000
• Sale of an old computer (capital asset): EUR 800
• Exempt training given (Art. 44): EUR 2,000

Turnover for the threshold: EUR 18,000 (only the design work counts) Marie remains below the EUR 25,000 threshold and can keep the VAT exemption scheme.

First year of activity

If you start your activity partway through the year, the EUR 25,000 threshold is prorated based on the number of days of activity.

Example: Pierre launches his consulting activity on 1 July 2026. His threshold for 2026 is: 25,000 x (184 / 365) = EUR 12,602.74

If he exceeds this prorated amount before 31 December, he will have to switch to the normal VAT scheme.

Who can benefit from the exemption scheme?

Eligibility conditions

To benefit from the VAT exemption scheme, you must:

1. Be a taxable person for VAT established in Belgium
2. Have an annual turnover not exceeding EUR 25,000 excl. VAT
3. Not carry out an activity excluded from the scheme

Activities excluded from the exemption scheme

Certain activities are expressly excluded from the exemption scheme, regardless of turnover:

• Activities linked to horeca (hotels, restaurants, cafés) for the supply of drinks
• Sales of new vehicles as part of intra-Community transactions
• Activities carried out by VAT groups
• Supplies of new buildings and building land
• Taxable persons carrying out supplies of goods subject to the margin scheme (second-hand goods, works of art)
• Activities subject to excise duty (tobacco, alcohol, energy products)

Eligible legal forms

The scheme is open to all legal forms:

• Self-employed individuals (as a main or secondary activity)
• SRL (private limited company)
• SC (cooperative company)
• ASBL (non-profit association, for their VAT-liable activities)

How to opt into the exemption scheme

When setting up the business

When you register for VAT through the enterprise counter (guichet d'entreprise – Acerta, Liantis, Xerius, UCM, Partena, etc.), you can directly opt for the exemption scheme by ticking the relevant box on form 604A.

The enterprise counter forwards your application to the competent VAT control office. Your VAT number will be in the format BE 0XXX.XXX.XXX, with a note indicating you are exempt.

While already trading (switching from the normal scheme to the exemption scheme)

If your turnover falls below the EUR 25,000 threshold, you can request the switch to the exemption scheme by sending form 604B to your VAT control office. The change takes effect on 1 January of the following year.

Warning: when switching from the normal scheme to the exemption scheme, you must carry out a revision of the VAT deducted on capital assets whose revision period has not yet expired (5 years for movable assets, 15 years for immovable assets – Article 48, para. 2 of the VAT Code).

Example: you bought a laptop for EUR 2,000 excl. VAT in 2024 and deducted EUR 420 of VAT. You switch to the exemption scheme in 2026. Revision to be made: 420 x 3/5 = EUR 252 to be repaid to FPS Finance (SPF Finances).

Administrative obligations under the exemption scheme

Even under the exemption scheme, you retain certain obligations:

1. VAT identification

You must have a Belgian VAT identification number (BE 0XXX.XXX.XXX). This number is assigned when you register with the enterprise counter.

2. Mandatory wording on invoices

Your invoices must carry the following mandatory wording:

"Small business subject to the VAT exemption scheme. VAT not applicable."

Or in Dutch:

"Kleine onderneming onderworpen aan de vrijstellingsregeling van belasting. BTW niet van toepassing."

You may under no circumstances show a VAT amount on your invoices. If you charge VAT by mistake, you owe it to the state (Article 53bis of the VAT Code).

3. Keeping a ledger

You must keep a simplified ledger chronologically recording:

• All invoices issued
• The total amount of turnover

4. Annual listing of taxable customers

Before 31 March each year, you must file a listing of taxable customers you invoiced more than EUR 250 to over the past year. This is filed via Intervat.

5. Special declaration for intra-Community services

If you receive services from a supplier established in another EU member state, you must in principle file a special declaration (form 629) and pay the Belgian VAT due on these services.

Concrete example: you use an online advertising service (Google Ads, invoiced by Google Ireland). You must declare the 21% Belgian VAT on this service via form 629.

Advantages of the exemption scheme

For the entrepreneur

• Administrative simplification: no periodic VAT returns, simplified bookkeeping
• Lower accounting cost: an accountant generally charges less for an exempt business
• Time savings: no monthly or quarterly VAT return tracking
• Simplified cash flow: no VAT to set aside and pay over

For individual customers (B2C)

• More competitive prices: your prices are directly the final price (no VAT to add)
• An exempt consultant who invoices EUR 100 is cheaper than a consultant under the normal scheme who invoices EUR 100 + EUR 21 VAT = EUR 121

Worked example

Jean, a self-employed translator working as a secondary activity in Liège:

For an individual customer, the exemption scheme offers a 21% price advantage.

Disadvantages and limits of the exemption scheme

1. No deduction of VAT on purchases

This is the major drawback. All the VAT paid on your business purchases (equipment, software, supplies, rent, etc.) stays at your cost.

Example: you buy a MacBook Pro for EUR 2,499 incl. VAT. Under the normal scheme, you deduct EUR 434 of VAT. Under the exemption scheme, that EUR 434 is a final cost.

2. Disadvantage for B2B customers

Your customers who are taxable persons cannot recover VAT on your invoices. If a competitor under the normal scheme invoices EUR 100 + EUR 21 VAT, the B2B customer effectively only pays EUR 100 (because they deduct the EUR 21). You therefore have no price advantage in B2B.

3. A ceiling that limits growth

The EUR 25,000 threshold can hold back your development. Some self-employed people voluntarily limit their activity to stay below the threshold, which is an economically questionable strategy.

4. Image of a small operation

The "VAT not applicable" wording on your invoices implicitly signals that your turnover is low. Some professional customers may view this negatively.

What happens if you exceed the threshold?

Exceeding the threshold during the year

If you notice during the year that your turnover will exceed EUR 25,000, you must:

1. Notify your VAT control office immediately
2. Switch to the normal VAT scheme from the very first transaction that takes you over the threshold
3. Charge VAT on all subsequent transactions
4. File periodic VAT returns from the relevant period onwards

Important: transactions carried out before the threshold is exceeded remain exempt. Only transactions from the point of exceeding the threshold are subject to VAT.

Practical example

Laura, a self-employed coach in Brussels, reaches EUR 24,500 of turnover on 15 October. On 20 October, she invoices a service worth EUR 1,200.

• Transactions from 1 January to 15 October: EUR 24,500 under the exemption (no VAT)
• Invoice of 20 October: EUR 1,200 + EUR 252 VAT (21%)
• From 20 October: all invoices carry VAT

Laura must file a VAT return for the 4th quarter (or for October, November and December if she files monthly).

Returning to the exemption scheme

If your turnover falls back below EUR 25,000 the following year, you can request a return to the exemption scheme via form 604B. The change takes effect on 1 January of the following year.

The exemption scheme and international transactions

Intra-Community services received

As an exempt business, if you buy services from EU suppliers (web hosting, SaaS software, online advertising), you must:

• Provide your Belgian VAT number to the supplier
• File a special VAT declaration (form 629) with your control office
• Pay Belgian VAT (21%) on these services

You cannot deduct this VAT since you are under the exemption scheme.

Intra-Community acquisitions of goods

If your intra-Community acquisitions of goods exceed EUR 11,200 per year, you must register as an intra-Community operator and pay Belgian VAT on these acquisitions.

Below this threshold, the VAT of the country of origin applies (you pay the supplier's country's VAT).

Exports and imports

Export transactions (to countries outside the EU) remain possible under the exemption scheme. Imports are subject to Belgian VAT collected by customs, and this VAT is not deductible for an exempt business.

VAT exemption scheme vs normal scheme: comparison table

When should you voluntarily leave the exemption scheme?

It can be advantageous to leave the exemption scheme before reaching the threshold in the following cases:

1. Significant investment planned: you are planning to buy expensive equipment and want to deduct the VAT
2. Mainly B2B customer base: your customers are taxable persons who deduct VAT, so the exemption scheme brings you no price advantage
3. Growth ambitions: you want to develop your activity without being held back by the ceiling
4. Structural VAT credits: your VAT-liable purchases significantly exceed your sales

Switching to the normal scheme is done by sending form 604B to the VAT control office. It takes effect on the following 1 January, or immediately if the threshold is exceeded.

The European reform: towards a cross-border threshold

Since 1 January 2025, European directive 2020/285 provides for a cross-border VAT exemption scheme for small businesses. Under conditions, this scheme allows small businesses in one member state to benefit from the exemption in another member state, provided their total EU turnover does not exceed EUR 100,000.

In Belgium, the transposition of this directive is under way. Belgian entrepreneurs will potentially be able to benefit from the exemption in other EU countries, and conversely, small foreign businesses will be able to operate under the exemption scheme in Belgium.

Practical advice

1. Monitor your turnover in real time: use invoicing software to track your turnover and anticipate exceeding the threshold
2. Review your situation regularly: compare annually the cost of non-deductible VAT against the savings in accounting fees
3. Invoice correctly: never forget the mandatory wording on your invoices
4. Keep your records: even under the exemption scheme, keep all your purchase invoices for 7 years
5. Plan for EU services: if you use online services from European suppliers, plan for form 629 and the VAT payable

Official resources

• FPS Finance – Exemption scheme: finances.belgium.be
• Form 604A (start of activity): available through your enterprise counter
• Form 604B (amendment): available through your enterprise counter
• Intervat (annual listing): eservices.minfin.fgov.be/intervat
• FPS Finance Contact Centre: 02 572 57 57

Conclusion

The VAT exemption scheme is a valuable tool for small businesses and self-employed people working as a secondary activity in Belgium. It offers significant administrative simplification and a real price advantage for activities aimed at individual customers. However, it is not suited to every situation: if you invest heavily, if your customers are mostly professionals, or if you are aiming for rapid growth, the normal VAT scheme will be more advantageous.

The key is to run the numbers based on your personal situation, your type of customer base and your growth plans. Do not hesitate to ask your accountant for a comparative simulation.

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This article was written by the Espero-Soft team for the blog dedicated to entrepreneurs in Belgium. For personalised advice, please consult a professional.