VAT Exemption Scheme in Belgium: Everything Small Businesses Need to Know in 2026
- 6 days ago
- 5 min read
If you run a small business in Belgium and your annual turnover doesn't exceed €25,000, you may be eligible for the VAT exemption scheme. This is a legal way to simplify your tax obligations and reduce administrative burdens. But what exactly does this scheme offer, who qualifies, and how do you actually switch to it? Let's break it down.
What Is the VAT Exemption Scheme?
The VAT exemption scheme (known as the "vrijstellingsregeling voor kleine ondernemingen" in Dutch and the "régime de la franchise de taxe" in French) is a special tax regime that allows eligible small businesses to operate without charging VAT to their clients.
Under this scheme, you are exempt from most standard VAT obligations. Specifically, you don't need to:
File periodic VAT returns
Charge VAT on your invoices
Pay VAT to the Treasury
Since January 1, 2025, the scheme has been updated in line with EU Directive 2020/285, and Belgian businesses can now also apply for VAT exemption in other EU Member States, provided they meet the relevant thresholds in those countries.
Who Can Use the VAT Exemption Scheme in Belgium?
To qualify for the scheme, your business must meet the following conditions:
Your annual turnover in Belgium does not exceed €25,000 (excluding VAT)
You operate as a taxable person: any legal form qualifies (sole proprietorship, company, etc.)
You are not part of a VAT unit
You do not operate in certain excluded sectors, such as construction work, businesses using a cash register system, or deliveries of used materials
If you want to apply the scheme in other EU Member States as well, two additional thresholds apply:
Your EU-wide annual turnover must not exceed €100,000
Your turnover in the specific Member State must not exceed its national threshold (max €85,000)
Advantages and Disadvantages of the VAT Exemption Scheme
Advantages
Lower prices for end consumers. Since you don't charge VAT, your prices are automatically more competitive for private clients or businesses that cannot deduct VAT.
Reduced administrative burden. No need to file periodic VAT returns. Your administrative obligations are significantly reduced. You do not need to file periodic VAT returns, although certain obligations may still apply (for instance, a customer listing).
Cash flow benefit. You collect the full invoice amount without having to set aside VAT for the Treasury.
Cross-border opportunity (since 2025). Belgian SMEs can now apply VAbT exemption in other EU countries, making cross-border business simpler.
Disadvantages
No VAT deduction on purchases. You cannot recover VAT on business expenses, such as tools, equipment, and services. This is the biggest drawback if you have significant operating costs.
Growth ceiling. Once your turnover exceeds €25,000, you automatically fall under the standard VAT regime.
Perception in B2B markets. In some industries, VAT invoices are the norm. Businesses operating under the VAT exemption scheme may therefore need to explain the scheme to clients who are unfamiliar with it.
What Is the €25,000 Turnover Threshold?
The threshold is calculated based on your total annual turnover in Belgium, excluding VAT. It includes:
Transactions that would normally be subject to VAT
transactions subject to the reduced VAT rate of 0% (e.g., newspapers)
Certain exempt transactions with the right to deduct
The following items are not counted toward the threshold:
Sales of investment assets
Operations excluded from VAT
Transactions located abroad
Starting your business mid-year?
If you start your business during a calendar year, the €25,000 threshold is reduced proportionally to the number of days remaining in the year.
Example: You start on July 1, 2026, and estimate revenue of €15,000 by year-end. The pro-rata threshold = €25,000 – (€25,000 × 181/365) = €12,603. Since €15,000 > €12,603, you cannot apply the scheme in 2026.
What if you exceed the threshold?
Exceeded by up to 10% (e.g., turnover reaches €27,500): You can remain in the scheme for the rest of the current year, but you must switch to the standard regime on January 1 of the following year.
Exceeded by more than 10%: You switch to the standard VAT regime immediately from the transaction that caused the exceedance.
After leaving the scheme, you must wait at least one full calendar year before you can return.
What Should Small Businesses Pay Attention To?
Even under the exemption scheme, you are not completely free from administrative obligations. Here is what you still need to do:
Register for VAT: you still need a VAT identification number.
File an e604 declaration when starting, modifying, or ceasing your activity.
Submit a customer listing by March 31 each year, covering the previous year's transactions, or report "0.00" if no qualifying transactions occurred.
File a special VAT return if you make intra-community acquisitions or receive services for which you are the VAT payer.
Monitor your turnover closely throughout the year to avoid accidentally exceeding the threshold.
How Do I Issue an Invoice Under the VAT Exemption Scheme?
Invoicing under the VAT exemption scheme follows the same general rules as standard invoicing, with one key difference: you do not add VAT to your amounts, and you must include a mandatory legal statement on each invoice.
What wording must appear on the invoice?
The invoice must contain the legally required reference to the VAT exemption scheme. For example:
"Small business subject to the VAT exemption scheme. VAT not applicable."
In French: "Petite entreprise soumise au régime de la franchise de taxe. TVA non applicable."
In Dutch: "Kleine onderneming onderworpen aan de vrijstellingsregeling van belasting. Btw niet van toepassing."
Beyond this statement, your invoice must still include all standard elements:
Your name or company name and address
Your VAT number (BE + 10 digits)
Invoice number and date
Client's name, address, and VAT number (for B2B)
Description of goods or services
Total amount (without VAT)
How Do I Switch to the VAT Exemption Scheme?
If you already have a VAT number and want to switch to the VAT exemption scheme, you need to opt in via the e604 application in MyMinfin (the Belgian tax portal).
The scheme applies from the start of a quarter, and you must submit your request before the 15th of the month preceding that quarter:
Request deadline | Scheme effective from |
March 15, 2026 | April 1, 2026 |
June 15, 2026 | July 1, 2026 |
September 15, 2026 | October 1, 2026 |
December 15, 2026 | January 1, 2027 |
You can access the e604 form by logging in to your personal account on myminfin.be → "Useful links" tab → "VAT: starting, modifying or ceasing your activity (app e604)"
If you are just starting your business, you can request the VAT exemption scheme directly in your e604A (commencement of activity) declaration.
Summary: Is the VAT Exemption Scheme Right for You?
The VAT exemption scheme is a strong fit if:
Your annual turnover is below €25,000
Your clients are mainly private individuals or non-VAT businesses
You have relatively low business expenses (where recovering input VAT would matter)
It is less suitable if:
You make significant purchases and want to reclaim input VAT
You plan to grow quickly and will likely exceed the threshold
Your B2B clients prefer to deal with standard VAT-registered suppliers
When in doubt, consult a Belgian accountant or tax advisor who can model both scenarios based on your specific situation.
Sources: Belgian FPS Finance (finance.belgium.be), BDO Belgium, Accountable Belgium. Information reflects the 2026 edition of the VAT exemption scheme rules.
Thinking About Starting a Business in Belgium?
Before you can choose a VAT regime, you need a registered company. If you haven't incorporated yet — BelDoc makes the entire LLC registration process fully online. No office visits, no paperwork, no jumping between platforms. Legal documents, notary support, and VAT registration all in one place, in about 20 minutes.
