How does VAT work with electronic invoicing?

With electronic invoicing via Peppol, the VAT rules remain fully in effect. Nothing changes about your VAT obligations: only the way the invoice is delivered is different.

VAT rules remain unchanged

Electronic invoicing does not change any existing VAT legislation:

Your VAT rates remain the same
The VAT return procedure does not change
All existing VAT exemptions and special arrangements remain in effect

Which VAT rate or arrangement applies is determined by you (or your accountant), not by the system.

What is important?

1. Correct VAT numbers

When sending via Peppol, the VAT number is extra important, because it helps determine where the invoice is delivered:

Your own VAT number must be correctly configured
Your customer’s VAT number must be filled in correctly on the customer record

When you enter a VAT number, it is automatically checked for validity. If the number is invalid, you will get a warning and can correct it before sending the invoice.

2. You set reverse-charge VAT yourself, per customer

Sage Cloud Demat Invoicing does not automatically apply 0% VAT or the reverse-charge mechanism, not even with a valid foreign VAT number. This is intentional: whether you may reverse-charge or exempt VAT depends on your situation and on what you supply, and the system cannot decide that for you.

You set it yourself on the customer record, in that customer’s default document settings:

VAT shifted: the default reverse-charge setting used when you create a document for this customer
VAT percentage: the default VAT rate for this customer

When creating an invoice, you can still adjust those default values per document.

⚠️ Please note: if you create an invoice as “VAT shifted”, set the VAT rate on the invoice lines to 0%. An invoice line with a rate above 0% on a reverse-charge invoice is blocked when sending via Peppol.

3. Invoices to other EU countries

For B2B invoices within the EU there are two different arrangements, and the difference lies in what you supply:

Goods: an intra-Community supply is, under conditions, exempt from Belgian VAT (article 39bis of the Belgian VAT Code). A valid VAT number from your customer is one of those conditions, but not the only one.
Services: for most B2B services, the VAT is shifted to your customer in the other EU country (article 21, § 2 of the Belgian VAT Code), the so-called reverse charge.

So a valid VAT number alone is not enough to know which arrangement applies. In doubt? Consult your accountant before configuring the customer record.

Frequently asked questions

Q: Do I need to file my VAT return differently? A: No, your VAT return procedure remains exactly the same. You use the data from the system as always.

Q: What if a VAT number is incorrect? A: You will get a warning if a VAT number is not valid. Correct it before sending the invoice; an incorrect VAT number can also cause the Peppol delivery to fail.

Q: Does the system automatically apply 0% VAT for foreign customers? A: No. You set reverse charge or exemption yourself on the customer record or on the document. That way you (together with your accountant) stay in control of the correct VAT treatment.

Need help?

For questions about which VAT arrangement applies in your situation, your accountant is the right point of contact. For questions about the settings in Sage Cloud Demat Invoicing, you can reach our support team via help@clouddematinvoicing.be.