VAT franchise scheme in Belgium: the €25,000 threshold and 2026 rules

In brief

The VAT franchise scheme allows Belgian self-employed individuals and companies with annual turnover below 25,000 euros to invoice without VAT and to skip periodic VAT returns. In return, VAT paid on professional purchases cannot be deducted. Since 2025, the scheme can also apply in other EU member states thanks to the cross-border EU extension.

What is the VAT franchise scheme?

The value added tax franchise scheme — officially the special VAT exemption scheme for small businesses — is set out in Article 56bis of the Belgian VAT Code (CVAT). It allows taxable persons whose annual turnover does not exceed €25,000 to invoice clients without VAT and to be exempt from the most burdensome periodic filing obligations.

This scheme is often misunderstood: it is not a VAT exemption in the classic sense (such as Article 44 for liberal professions), but a special administrative simplification regime based on a turnover threshold. The taxable person technically remains a debtor but benefits from a franchise as long as they remain below the threshold.

Who can benefit from the franchise scheme?

Eligibility conditions

The following may opt for the franchise scheme:

• Self-employed individuals (natural persons carrying out an economic activity)

• Companies (SRL, SA, SNC, etc.) whose total annual turnover in Belgium does not exceed €25,000 excluding VAT

The €25,000 threshold is assessed on all taxable transactions carried out in Belgium, excluding:

• Deliveries of own business investment goods

• Ancillary real estate and financial transactions

Exclusions and ineligible activities

Certain activities are excluded from the franchise scheme, regardless of their size:

• Intra-Community supplies of new goods (vehicles, etc.)

• Intra-Community acquisitions above the €11,200 threshold

• Activities subject to the special scheme for travel agencies or second-hand goods

• Certain taxable persons subject to enhanced filing obligations (real estate developers, etc.)

What the scheme means in practice

What you no longer do

Under the VAT franchise:

• You show no VAT amount on your invoices (VAT is globally zero)

• You are not required to file periodic VAT returns (monthly or quarterly)

• You are not required to submit the intra-Community operations listing (IC listing)

Your invoices must mandatorily carry the mention: "Special small business exemption scheme — VAT not applicable". An invoice missing this mention, or worse, showing a VAT amount, can cause complications during an audit.

What you can no longer do

In return, you lose the right to deduct VAT on your professional purchases. VAT paid on your supplies, equipment, professional rent or subcontracting services becomes a permanent cost.

This point is crucial in your cost-benefit calculation: if you have significant investments (equipment, vehicle, office fit-out), the irrecoverable VAT may exceed the administrative savings achieved.

Obligations that remain

Even under the franchise, you must:

• File an annual listing of VAT-registered clients (by 31 March of the following year), for Belgian B2B sales over €250 per client

• Retain your invoices under the standard archiving rules (7 years — see our guide on invoicing and invoice archiving in Belgium)

• Register for VAT if intra-Community acquisitions exceed €11,200

Pros and cons: the comparison table

Partial first year: the time-apportioned calculation

If you start your activity mid-year (or opt for the scheme mid-year), the €25,000 threshold is assessed pro rata temporis. Example: you start on 1 July. The applicable threshold for your first year is €25,000 × 6/12 = €12,500. If your second-half turnover exceeds €12,500, you must switch to the normal regime from the following month.

What happens when you exceed the threshold?

The 10% tolerance

Belgian law provides a tolerance of around 10%: if your turnover exceeds €25,000 but remains below approximately €27,500, you may continue to apply the franchise scheme for the rest of the current year. You switch to the normal regime as of 1 January of the following year.

If your turnover exceeds this tolerated ceiling during the year, you must immediately switch to the normal regime, from the transaction that triggers the excess.

Formalities when switching

When transitioning to the normal regime, you must:

Notify the Administration via MyMinfin (SPF Finances / FOD Financiën online portal)

Start charging VAT on new transactions

File your first periodic VAT return within the required deadlines

Prepare an opening statement (inventory of VAT assets and liabilities at the transition date)

You will then be entitled to recover VAT on the stock of goods purchased under the franchise and still in stock at the transition date — a formality not to overlook if you have built up significant inventory.

Opting in and opting out: how to choose?

The franchise scheme is not automatic: even if you meet the conditions, you must have actively chosen it when registering for VAT (Form 604A for new taxable persons).

You may at any time opt for the normal regime (exit the franchise), for example because you are anticipating significant investments whose VAT you wish to recover. This option takes effect on 1 January of the following year (or immediately if the Administration accepts it mid-year).

Before deciding, systematically assess your cost structure: if VAT on your purchases represents more than 5 to 6% of your turnover, the normal regime often becomes more advantageous on balance, despite the additional filing obligations. Also compare with the professional flat-rate tax deductions to which you are entitled for corporate tax or personal income tax — both optimizations are complementary.

The 2026 novelty: the cross-border EU extension

Since 1 January 2025 (transposition of EU Directive 2020/285), eligible small businesses can benefit from the franchise scheme in other EU member states without being established there. This measure, known as the European "SME scheme", is particularly useful for freelancers and micro-businesses making occasional sales in multiple EU countries.

Conditions for the cross-border scheme:

• Total annual turnover across the entire EU does not exceed €100,000

• Turnover in each relevant member state remains below that state's local threshold (varies by country)

• You must notify your member state of establishment (Belgium) of your wish to use the scheme in other countries

This extension is particularly relevant if your activity involves clients in neighboring countries (France, Netherlands, Luxembourg, Germany). It avoids having to register for VAT in each country for marginal sales.

The annual listing of VAT-registered clients

Even under the VAT franchise, you are required to file each year before 31 March a listing of all Belgian VAT-registered clients to whom you sold for a total exceeding €250 during the year. This listing is transmitted electronically via Intervat (SPF Finances / FOD Financiën portal).

Note: forgetting this listing is a common administrative infringement, penalized by a fine.

Franchise scheme and company formation: what to know

If you are creating an SRL or SA, note that the franchise scheme also applies to legal persons. However, when creating a company in Belgium, it is common for the initial investments (equipment, fit-out, opening stock) to represent significant recoverable VAT. In that case, opting immediately for the normal regime allows you to recover that VAT from the first quarter.

Think through your VAT strategy before the first registration: the choice made at the outset is harder to change mid-year.

Company Belgium and franchise scheme management

Company Belgium's invoicing module natively supports the VAT franchise scheme. When you activate franchise mode in your profile:

• The mandatory legal mention is automatically added to every invoice

• No VAT amount is calculated or displayed

• Your cumulative turnover tracking alerts you as you approach the threshold of €25,000 (or the pro-rated threshold in the first year)

• Annual listing generation for VAT-registered clients is available in one click in Intervat format

If you cross the threshold, the module guides you through the transition to the normal regime, generating the first VAT return and reminding you of the administrative steps to complete.

Combine this tracking with corporate income tax prepayments for a complete view of your quarterly tax obligations — VAT and withholding tax being just two of the cash flows to anticipate in a Belgian SME's treasury.