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Changes in VAT and Gaming Tax for Content Services
On 1 April 2010 two notifications of the Belgian Ministry of Finance came into force. One notification leads to changes in the Belgian VAT rules with respect to content services. The other notification looks upon gaming and betting via 0900-phone lines with respect to the Belgian gaming tax. Taxand Belgium and Taxand Netherlands review these changes and subsequent impacts.
Belgian VAT treatment of content services
Based on the notification a distinction should be made between the services provided by the telecom provider and the content provider. The telecom provider should make a distinction on its invoice between the telecom service and the content service. The latter service should be mentioned separately on the invoice, making reference to: the decree of the Ministry of Finance, the date of the service provided, the price including the VAT which is charged for the content service and a codification number of the content or the content provider. The content provider is responsible for the correct VAT treatment of the content service and will also be liable for the VAT due.
If the customer of the content provider is a taxable person with VAT, who uses the content service for business purposes, the content provider should issue a separate invoice to this customer.
Possible double taxation when intra-EU services are supplied by a foreign content provider
If content services - containing a gaming or betting aspect - are provided by a foreign content provider to a customer in Belgium, double taxation may occur. The service can be subject to the VAT of the EU Member State of the supplier and also be subject to Belgian gaming tax.
Belgian gaming tax treatment of content services
The notification elaborates on the persons who can be appointed as taxpayer for the gaming tax, the taxable amount and the administrative obligations.
The tax on gaming and betting is due by "every person who receives stakes in games and bettings", for his own account or as an intermediary. The following services that take part of the supply chain can be appointed as taxpayer. The gaming tax is only due by a domestic, i.e. established taxpayer or permanent establishment.
In principle the content provider will be appointed as taxpayer. However, if the content provider is not established nor has a permanent establishment within Belgium one of the following service providers will be appointed as taxpayer by the Belgium Tax Authorities:
The Operator: The Operator is the telecommunication company;
The Facilitator: The Facilitator is the person who deals between the Operator and Organiser with respect to processing the telecommunication data;
The broadcasting channel: Even if the broadcasting channel does not organise the game the broadcasting channel can still be appointed as taxpayer for the gaming tax.
If the service providers are treated as taxable person some practical issues might occur. Service providers may not be willing to take the position of taxable person instead of the foreign content provider and thus may threaten to cease the use of their telecom network by the content provider or force the content provider to operate through an established legal entity in Belgium. Note that it is currently not possible for the foreign content provider to appoint a fiscal representative for the gaming tax in Belgium which will act in its behalf.
The gaming tax is levied on the gross amount of all stakes placed by the participants. The term 'all stakes' has a general and wide coverage and includes registrations costs and all stakes of which the amount is equal or is determined by participants. The term gross amount means that the tax is levied on the total amount received and that no costs can be deducted by the taxpayer. In order to avoid double taxation, i.e. gaming tax and VAT, the part of the remuneration that applies to the telecommunication service is exempt for the gaming tax. Thus, the taxable amount for the gaming tax is the total amount of stakes minus the remuneration for the telecommunication service.
The taxpayer will have to file a 'preliminary' tax return, at least two days prior to the commencement of the activities. The taxpayer will also have to establish a security, i.e. bank guarantee. The amount will be determined by the Belgium tax Authorities with a minimum of EUR500 and maximum of EUR50.000 depending on the number of activities of the taxpayer. The taxpayer is obliged to file a tax return and pay the gaming tax every 1st and 15th day of the month.
It is likely that the taxpayer will not be able to determine the exact amount of tax due in such a short time frame. The taxpayer can therefore request for a different declaration procedure.
Next to the filing requirements the taxpayer for the gaming tax has the legal obligation to issue gaming tickets, i.e. a ticket on which the stack, deposit or the bets are mentioned. Moreover, the taxpayer will have to register the received remuneration per category, in combination with the final number which is mentioned on the gaming ticket provided, on a daily basis. In the notification, a relief from these administrative obligations is granted to the taxpayer who provides gaming and betting via 0900-phone lines. The taxpayer should request the relief by closing a so-called Server-Agreement with the competent Tax Authorities. Consequently, the taxpayer can, digitally register this information instead of providing and registering the gaming tickets. If the obligations under the gaming tax are not met, the taxpayer will be fined an amount up to five times the gaming tax that is due.
The new VAT and gaming tax treatment of content services in Belgium may lead to practical issues in relation to foreign content providers and may also lead to unnecessary double taxation. The latter could be very costly. It is therefore recommended for content providers to closely monitor their activities and for telecom providers to adjust invoicing methodology in line with the notification.
Your Taxand contacts for further queries are:
T. +32 2 427 4011
T. +31 2 0301 6649
More news from Taxand Netherlands:
- Update on Potential Changes to the Dutch Corporate Income Tax Regime
- Governing the Transfer Pricing of a Stripped Sales Organisation
- Changes in VAT and Gaming Tax for Content Services