A complicated ruling

Reverse VAT for chain and hirer liability?

For Chain and Affiliate Liability (WKa), a mandatory VAT reverse charge mechanism applies in a number of cases. Sometimes, on the contrary, there are situations when the VAT reverse charge mechanism does not apply. This makes it a complicated regime. In this article, we list when the VAT reverse charge mechanism does or does not apply.

The VAT reverse charge mechanism? What is it?

Carrouselfraude is een vorm van belastingfraude waarin gefraudeerd wordt met de afdracht en teruggave van btw, men spreekt ook wel van een btw-carrousel. In de jaren ’80 was het vooral een probleem wat speelde in de bouw. Onderaannemers en aannemers stuurden facturen met BTW maar droegen de btw niet af. Omdat er wel op de facturen btw in rekening werd gebracht, kon de afnemer (opdrachtgever of (hoofd)aannemer) de btw aftrekken als voorbelasting. Als oplossing voor de carousselfraude is in de jaren ’80 de btw-verleggingsregeling bedacht.

Bij de btw-verleggingsregeling wordt er geen btw in rekening gebracht. Op de factuur staat dan ‘btw verlegd’. Op de factuur moet dan wel het btw-nummer van de afnemer worden vermeld! De uiteindelijke afnemer, bijvoorbeeld de hoofdaannemer is dan verantwoordelijk voor de juiste btw berekening en de afdracht daarvan. De ondernemer die de btw verlegd blijft wel verantwoordelijk voor de btw. Het is daarom wel heel belangrijk dat de onderaannemer goed nagaat of hij de btw wel moet verleggen.

De btw-verleggingsregeling is een onderdeel van de Keten- en Inlenersaansprakelijkheid.

As a temporary employment agency, when to reverse VAT?

The ‘Sales Tax Implementing Decree 1968’ specifies when VAT must be reverse-charged. The reverse charge mechanism must (compulsorily) be applied in the following cases:

1. When (sub)contracting work of a material nature to immovable property (metal construction, construction and landscaping) or ships and cleaning work on behalf of the work of a material nature;

2. For the hiring out of workers who will perform work under supervision and management for a work as referred to under point 1.

There are also 2 exceptions to this, namely:

1. Where the work of a material nature takes place largely wholly or partly in the (sub)contractor's own workshop or

2. When the work is subordinate to an agreement of purchase and sale of an existing object.

The above exceptions are also not subject to the Chain and Hirer's Liability.

Example 1 An employment agency sends a temporary worker to carry out cleaning and clearance work on a construction site for a client. This cleaning work is part of the client's material work. The temporary employment agency sends an invoice with ‘VAT reverse charge’ upon completion of the work. The client pays 20% of the invoice amount into the temporary employment agency's giro account. If the temporary employment agency does not have an SNA Quality mark, the hirer must pay the actual liability risk into the g account (between 40% and 55%).

Example 2 An employment agency sends a temporary worker to make doors at a client's carpentry factory. These doors are eventually delivered by the client (carpentry factory) to a main contractor's construction site and are also hung. Hanging the doors is less work than making them in the carpentry factory. More than 50% of the hours are made in the carpentry factory and not on the construction site. The Chain and Hirer liability does not apply, nor does the VAT reverse charge mechanism. The temporary employment agency must send an invoice with VAT. The client pays 25% of the invoice amount including VAT into the temporary employment agency's g account.