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Amendment to VAT Act 2025 heads to chamber of deputies

Below, we are bringing you up to date on the amendment to the VAT Act 2025. The draft amendment has already gone through the comment procedure, and the version for the government meeting has been published. It contains several changes after the comments were settled.

The proposal changes the rule for determining the tax base where employers provide supplies to their employees (or close persons) for a symbolic price. In such cases, the tax base should be determined based on the supply’s usual price. Nonetheless, the rules have been relaxed and the tax base equal to the usual price will only apply for the supplies of immovable property. This change will therefore not ultimately affect all supplies provided to employees.

As regards the (narrower) scope of financial activities exempt from VAT, there have been no changes to the list of activities that will not be exempt from VAT (for details, see here: Amendment to VAT Act to narrow scope of exempt financial activities). However, it is expected that the effective date will be postponed to 1 January 2026 to give the institutions concerned more time to prepare for the changes. The only exception to this postponement is the management of individual portfolios, which will already constitute a taxable supply from 1 January 2025.

Other changes include corrections of the tax base for irrecoverable receivables. The new draft implies that the correction will be voluntary and not mandatory as the Ministry of Finance originally proposed. New grounds for these corrections and the relaxation of certain conditions have been preserved, which will be discussed in detail in the next issue of our Tax and Legal Update.

As regards the time limits, the only change has been made to the right to deduct on the basis of a credit note where the time limit for claiming the right will now coincide with the general time limit for the application of the VAT deduction. This time limit remains reduced to a maximum of two years.
In general, the comment procedure has resulted in the clarification of some interpretative ambiguities. However, some other rules have also been added, e.g., stricter conditions for triangular transactions, and changing the definition of medical devices and their accessories.

Unfortunately, the draft does not remove or softens certain negative adjustments originally proposed, such as the supply recipient’s obligation to refund the VAT deduction where the liability is not paid within six months, or keeping the burden of proof on the part of the payer within the concept of liability for unpaid tax.