Reporting requirement for companies using the general pro ratio figure
by Bert Vandorpe and Emiel Vanhée
Mixed taxable persons should always limit their right to deduct for their incoming transactions. They can do this on the basis of the general pro ratio figure or on the basis of actual use. From 2023, taxpayers wishing to exercise their right to deduct on the basis of actual use have to give prior notice (see previous article). However, from 2024, the prior reporting requirement will be extended to mixed taxpayers applying the general pro ratio figure.
What is the general pro ratio figure?
The right to deduct for mixed taxable persons is generally determined on the basis of the general pro ratio figure. This is a percentage that indicates the extent to which a business makes VAT-taxable supplies in relation to its total supplies. This ratio is then used to determine the right to deduct VAT on all goods and services purchased on behalf of the taxable person.
To date, no prior formality has been required to apply the general pro ratio figure. However, this will change in 2024.
Changes in 2024
Application of the general pro ratio figure
Taxpayers applying for a new VAT number and wishing to apply the general pro ratio figure (or actual use) must declare this through form e604A.
Companies already applying the general pro ratio figure on 31 December 2023 must report this by 1 July 2024 (using form e604B). A change in VAT status, e.g. to a fully taxable person, must also be reported using form e604B.
Provisional and final general pro ratio figure
In the deduction scheme that is based on the general pro ratio figure, there is a provisional and a final rate. The provisional rate is the rate used to determine the right of deduction for the current calendar year. It is always the ratio of the previous year. For a new company, the provisional rate is determined on the basis of the prospects.
After the end of the calendar year, the right to deduct is finally determined on the basis of the results of the previous financial year. This is known as the final ratio.
The difference in the right to deduct between the provisional and final rates must be corrected no later than the monthly return in March or the return for the first quarter. Currently, a calculation sheet with explanations must be attached to this VAT return. However, from 2024, the procedure for communicating the provisional and final general pro ratio figures will be digitalised and have to be communicated via Intervat.
Do you have any questions about the general pro ratio figure or the new reporting requirements? Contact one of our experts using the form below.
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Bert Vandorpe
Senior Advisor Tax bert.vandorpe@vdl.be
Emiel Vanhée
Advisor Tax emiel.vanhee@vdl.be
Disclaimer
In our opinions, we rely on current legislation, interpretations and legal doctrine. This does not prevent the administration from disputing them or from changing existing interpretations.
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