VAT exemption for lawyers comes to an end

The Belgian Federal Government has announced that as of 1 January 2014 the current VAT exemption for lawyers  will be abolished, reports Tax And Belgium’s Koen Dewilde. Belgian was, until now, the only country in the European Union where legal services remained exempt from VAT. Previously this meant that law firms didn't charge their clients VAT on their services but rather had to absorb any VAT costs on overheads. This VAT exemption meant that although fees could be kept down, overall costs were increased. Additionally it meant that EU firms were not on a level playing field with firms from outside the EU. The abolition of this exemption makes an end to the unclear situation many Belgian branches of foreign law firms were confronted with. As from 2014 they will all have to subject their services to VAT, but will also be able to deduct input VAT (and possibly carry out as well a positive revision of non-deducted VAT on fixed assets).