VAT taxable amount in Belgium: definition, calculation and examples

What is the VAT taxable amount?

The taxable amount is the amount to which the VAT rate is applied to calculate the tax due on a taxable transaction.

It generally consists of the price excluding tax of the goods sold or services provided, increased by the items that must form part of the consideration for the transaction for tax purposes.

The principle is straightforward: VAT is charged on the taxable value of the transaction, not necessarily just the price shown for a product.

Taxable amount, price excluding VAT and price including VAT: the differences

Three amounts must be distinguished:

• Taxable amount: the amount used to calculate the tax, after taking account of the applicable charges and reductions.
• VAT amount: the tax obtained by applying the rate to that amount.
• Price including VAT: the total comprising the taxable amount and the VAT charged.

For example, on a taxable amount of €100 subject to Belgium’s standard 21% rate, VAT is €21 and the price including VAT is €121.

For a simple transaction without charges or reductions, the taxable amount equals the price excluding VAT. Where ancillary charges or discounts apply, it may differ from the starting price.

The taxable amount must not be confused with a business’s economic value added, profit or annual turnover either. It represents the value used for tax purposes for a specific transaction.

Which items form part of the VAT taxable amount?

Under the Belgian VAT Code, European rules and the guidance from FPS Finance, the taxable amount may include more than the initial price.

In particular, it includes certain transport charges, commissions, insurance, packaging and taxes. Conversely, eligible discounts and certain amounts paid on the customer’s behalf may be excluded.

Table of items included in and excluded from the taxable amount

These treatments reflect the general principles. A particular classification may be necessary depending on the contract, the nature of the service and the circumstances of the transaction.

Source: FPS Finance: taxable amount (in French).

Delivery, insurance and packaging charges

Ancillary charges requested from the customer by the supplier normally form part of the taxable amount of the transaction to which they relate.

This includes, in particular:

• transport and dispatch of goods;
• insurance charges connected with delivery;
• non-returnable packaging;
• certain commissions associated with the sale.

Showing these charges on a separate invoice line does not in itself make them independent of the product sold.

Thus, when a business invoices a product and its delivery as part of the same transaction, ancillary transport charges are generally added to the selling price to determine the calculation base.

However, an ancillary supply must be distinguished from a genuinely independent transport service. This classification depends on the economic reality and the contract.

Discounts, allowances, rebates and cash discounts

An eligible price reduction reduces the VAT taxable amount.

A commercial discount granted on a sale is therefore normally taken into account before calculating the tax, provided it meets the applicable conditions and has been granted by the time the tax becomes chargeable.

Several situations must be distinguished:

• Discount: a commercial reduction granted to the customer, for example on an order.
• Allowance: a reduction relating, in particular, to a defect or non-conformity.
• Rebate: a reduction calculated on a volume of purchases or over a period.
• Cash discount: a reduction linked to payment terms, particularly early payment.

Cash discounts have specific tax rules and must not automatically be treated as ordinary commercial discounts.

When a reduction is granted after the invoice has been issued, the conditions for adjusting the taxable amount and tax must also be examined.

Disbursements and reimbursement of expenses

Reimbursement of expenses is not automatically excluded from VAT.

The fundamental distinction concerns the person on whose behalf the expense was incurred.

If a service provider incurs its own costs to provide a service and then recharges them to the customer, those amounts generally form part of its taxable remuneration.

By contrast, an amount paid in the name and on behalf of the customer may constitute a disbursement excluded from the taxable amount.

Take a lawyer who incurs certain expenses on behalf of a client. Amounts paid to a third party may meet the conditions for disbursements, whereas the lawyer’s own administration or travel expenses normally form part of the cost of the service.

To qualify for exclusion, it must be possible to substantiate, in particular, the nature of the expense, its exact amount and the fact that it was genuinely incurred in the customer’s name and on their behalf. The accounting requirements must also be met.

These amounts must be recorded in suspense accounts. The service provider who pays them cannot deduct any VAT that may have been charged on them.

Returnable packaging, interest and compensation

Ordinary and customary packaging that the supplier accepts for return against a refund may be excluded from the taxable amount, subject to the prescribed conditions.

This is different from packaging sold outright to the consumer.

Interest due because of late payment is also excluded from the taxable amount, according to the principle presented by FPS Finance.

Compensation requires a more careful classification. A genuine payment to make good a loss does not necessarily constitute consideration for a transaction subject to VAT.

Conversely, contractual termination compensation may, in certain circumstances, remunerate a taxable service or commitment.

The label given to the payment is therefore not enough: its economic connection with the goods or services concerned must be examined.

How do you calculate the taxable amount and VAT?

Once the different items have been identified, VAT in Belgium is calculated in three steps.

Step 1: determine the taxable amount

For an ordinary transaction, the simplified formula is:

Taxable amount = price excluding VAT − eligible reductions + taxable ancillary charges

This formula does not replace the specific rules applicable to certain transactions.

When several units of the same product are sold, quantities must also be taken into account.

The initial amount then equals the unit price excluding VAT multiplied by the number of items, before the applicable adjustments.

Step 2: apply the VAT rate in force

The formula for the tax amount is:

VAT = taxable amount × VAT rate ÷ 100

In Belgium, the main rates are as follows:

The applicable rate depends on the nature of the goods or services, their tax conditions and, where relevant, the date of the transaction.

A medicine, a product delivery, a restaurant service or work on immovable property may be governed by different rules. The rate must therefore not be chosen solely to achieve a desired price.

To identify the conditions, see our guide to VAT rates in Belgium.

Step 3: calculate the total price including VAT

The formula is:

Price including VAT = taxable amount + VAT amount

This formula concerns taxable amounts. The total payable may also include amounts excluded from the taxable amount, such as a refundable packaging deposit or a disbursement, which should be shown separately according to their treatment.

When the rate is already known, you can check the result with our free Belgian VAT calculator.

Example: calculating VAT with a discount and delivery charges

A business sells a product for €200 excluding VAT. It grants a €20 discount and charges €10 for delivery.

We assume that the discount does reduce the taxable amount and that delivery is ancillary to a sale subject to the 21% rate.

The calculation is as follows:

200 − 20 + 10 = €190 taxable amount

190 × 0.21 = €39.90 VAT

190 + 39.90 = €229.90 including VAT

VAT is calculated on €190, not on the initial price of €200.

This example shows why a discount or delivery charges can change the final tax amount.

How do you determine the taxable amount when several VAT rates apply?

An invoice may include several products or services subject to different rates.

In that situation, the amount corresponding to each tax treatment must be determined before calculating the tax.

Allocating shared charges between several transactions

Take an invoice containing two products:

• A first product priced at €80 excluding VAT, subject to 21%.
• A second product priced at €40 excluding VAT, subject to 6%.

The supplier also charges €6 excluding VAT for transport relating to both products.

For this example, assume that the charges can be allocated in proportion to the value of the goods and that this allocation is justified.

The first transaction is allocated €4 of transport and the second €2.

The combined taxable amount is €126, total VAT is €20.16 and the amount payable is €146.16 including VAT.

This allocation is illustrative. It does not require a proportional method in every situation: the actual connection between the charges and the transactions must be examined.

Why not apply one rate to the whole invoice?

The standard 21% rate does not automatically apply to every charge on an invoice simply because one product is subject to that percentage.

Conversely, you cannot simply choose the most favourable reduced rate for the entire order.

The treatment depends on the actual transactions, any independent supplies and their ancillary elements.

For cases involving several lines, discounts or rates, see our guide to invoices with multiple VAT rates.

Taxable amount: which special cases should you know about?

The preceding rules mainly concern ordinary sales of goods and services. Some situations require further analysis before applying value added tax.

The taxable amount and the VAT exemption scheme for small businesses

A taxable person is, in principle, a person who independently and habitually carries on an economic activity within the scope of VAT.

However, not all businesses have the same invoicing obligations.

A taxable person under the normal scheme may charge VAT on taxable transactions. A business using the VAT exemption scheme for small businesses normally does not charge VAT on transactions covered by that scheme, subject to its conditions and exceptions.

The value of a sale, the business’s VAT scheme and the tax actually charged must therefore be distinguished.

Annual turnover is relevant, in particular, when examining the conditions for certain schemes, but is not itself the taxable amount of a particular invoice.

See our guide to VAT schemes in Belgium (in French).

The taxable amount and intra-Community VAT

Intra-Community VAT concerns transactions between parties located in different European Union Member States.

The VAT Directive establishes a common framework, but checks are needed on, in particular, the place of taxation, the nature of the transaction, the customer’s status and the conditions for any exemption or reverse charge.

For example, a sale of goods to a business identified for VAT in another Member State may receive different treatment from a sale to a private individual.

The absence of Belgian VAT on an invoice does not necessarily mean that the transaction has a taxable value of zero.

See the explanation of intra-Community VAT (in French).

Situations where the price is not enough

Certain transactions are subject to special rules for determining the taxable amount, including:

• imports of goods;
• certain property transactions and new buildings;
• certain work on immovable property;
• transactions between related parties subject to open-market value rules;
• sales of second-hand goods under a special margin scheme;
• certain transactions carried out by travel agents.

In these cases, the taxable amount may be determined using a method other than the ordinary selling price.

For an unusual transaction, the Belgian VAT Code, the administrative commentary from FPS Finance and, where necessary, advice from a tax expert can help establish the appropriate treatment.

Which tax obligations are linked to the taxable amount?

A correctly determined taxable amount makes it possible to calculate the VAT to be charged when the transaction is taxable and the supplier must apply the tax.

It also feeds into the accounts and, depending on the business’s scheme, periodic returns to the tax authorities.

VAT charged, deductible VAT and net VAT

VAT charged to customers on sales must not be confused with VAT recoverable on purchases.

For a business entitled to deduct VAT, the net VAT payable can be determined from the VAT due on its transactions, less the permitted deductible VAT, with any corrections and adjustments.

Calculating the taxable amount is therefore a preliminary step, but is not enough to establish all the tax obligations.

Check the taxable amount before issuing an invoice

Before finalising the document, it is useful to check five points:

1. The nature of each product or service and its tax treatment.
2. The price excluding VAT, quantities and reductions granted.
3. The ancillary charges to add to each transaction.
4. The amounts that may be excluded, with their supporting evidence.
5. The applicable rate, rounding and final amounts.

It is advisable to retain relevant information on the contract, invoices, payments received and reductions, so that the calculation method remains verifiable.

Reporting obligations then depend on the tax scheme and the transactions concerned. For more detail, see our guide to VAT returns in Belgium (in French).