An article 7 quater is inserted in the existing RD no. According to this article, the option must be exercised by means of a statement signed by the lessor and the tenant at the latest at the time of elaboration of the tenancy agreement and in which the following statements must be included:

Name, address and VAT number of the lessor and tenant

  • Identification of the building or part of the building, including the associated site where applicable
  • The advance directive to tax the rental
  • The date on which the option takes effect.
  • It is not necessary to prepare a separate statement if the lease contains the relevant statements.

The Royal Decree also clarifies that in the event of a tacit renewal of a lease under VAT, no additional option statement must be drawn up by the parties.

The Royal Decree provides a transitional arrangement for current contracts where there was the intention to opt for VAT. No later than the last day of the second month following the month of entry into force of the Royal Decree either a statement must be drawn up, as clarified above or an addendum must be added to the lease in which the relevant statements are included. Given that the Royal Decree was published on November 25, and therefore entered into force ten days later, this term applies until the end of February 2020. For current contracts with option VAT, it is important to arrange this formality by the stated date. Visit taxfyle.com/sales-tax-calculator for the best solutions in tax calculations.

The Questions You Need to Ask

The question must be asked whether action is needed with regard to current contracts that already contain the aforementioned data. The transitional provision is also not entirely clear with regard to old existing contracts for the rental of storage space that were optionally subject to VAT from 1 January 2019. In order to avoid all discussions, consideration should be given to reconfirming the option in these cases too by means of a joint statement or an addendum to the agreement.

The Right Notes

Finally, note that the Royal Decree is making various other adjustments and clarifying formalities. This concerns in particular: exemption from the billing obligation for the sharing economy service; invoicing rules and choice of location for VAT under the MOSS for telecom, radio / television and electronic services; declaration and payment obligation with the trustees; VAT exemption for outward processing; the notification method of the formation and change of cost-sharing associations; extension of travel agency scheme to all customers, in accordance with EU case law; declaration and payment of VAT on the acquisition of means of transport in the context of digitization of vignette 705; adjustment of refund rules in light of the Volkswagen AG judgment (invoicing years after taxable event);exemption from obligation to appoint a liable representative for taxpayers established in a non-EU country with which a legal instrument on mutual assistance exists.