Tax & Accounting Blog

Belgium – Lawyer Services subject to 21% VAT in 2014

Blog, Global Tax Compliance, Indirect Tax, ONESOURCE, Sales and Use Tax, VAT Tax Rates December 13, 2013


Until 31 December 2013 Belgium was the only EU country applying VAT exemption under art.44 §1 (1) of the VAT Act to lawyer services provided by Belgian, EU-listed lawyers or firms located in Belgium with the majority of Belgian or EU-listed partners. This allowed not charging clients VAT, however, the firms had to absorb any VAT costs on overheads. Effective 1 January 2014 Belgium will impose 21% VAT on the above-mentioned services. In result and unless a qualifying relief as statutory director or small VAT entrepreneur applies, all lawyers and lawyers-associates including trainees who regularly provide legal services on an independent basis will have to register for VAT purposes, account for VAT and file periodical returns. The abolition of this exemption puts an end to the unclear situation many Belgian branches of foreign law firms were confronted with. As of 1 January 2014 they will all have to subject their services to VAT, but will also be able to deduct input VAT. This change may have a positive impact on investment in assets in Belgium by law firms, since they will be entitled to deduct VAT on their business assets.
Under certain provisions some services like legal aid or the services of liquidators will remain VAT exempt.