VAT in Europe and how it works in OCE

The collectives on OCE are unincorporated initiatives of private individuals that, for the most part, receive funds from donations. Because of that, the collectives must always pay VAT directly on any service or product purchased.

The Value Added Tax, or VAT, in the European Union is a general, broadly based consumption tax assessed on the value added to goods and services. Here is the detailed description of how it works.

Summarizing: regardless of the nature of the buyer, VAT has to be paid for almost all goods and services that are bought and sold for use or consumption in the European Union.

In general, the difference between the VAT output and the VAT input can be either paid or refunded at the end of the fiscal year. Because of the fact that the income of the collectives is mostly made of donations, which are not subject to VAT, VAT has to be paid always and there is no refunds/VAT returns.

VAT within the same country

On all invoices issued in Europe, VAT must be clearly listed and is always paid, unless for the exempted exercises.

For example, OCE is a Belgian non profit organisation and is not VAT exempt. This means that when OCE invoices a client (regardless of its fiscal position), VAT is always applied and the rate depends on the nature of the service. The different rates in Belgium can be found on the official page of the Belgian tax authority.

Cross border VAT and the reverse charge

Since VAT rates differ from country to country, in Europe exists a "reverse charge" procedure for cross border purchases (more details here).

Because of that, when buying a product or a service abroad an invoice with a reverse charge procedure displays the note "VAT 0% - reverse charge applies".

It means that when a company is buying a service from a German supplier, but it is based in Belgium, the company will not pay the VAT directly to the supplier. It will declare it and pay it to the Belgian State as if it had bought the service in Belgium, at the applicable rate in Belgium.

Important: The reverse charge applies only between businesses and cannot be applied for your collective's expenses. VAT is always due for your collective's expenses.