Belgium To Review Tax Exemption For Domestic Lawyers

by Ulrika Lomas, Tax-News.com, Brussels

31 May 2002

It emerged this week that the Belgian authorities are considering ending a temporary tax break granted in 1977 (!) which exempts domestic legal firms from charging their clients VAT.

The move is likely to be welcomed by international law firms established in the country, which are obliged to charge their clients VAT at a rate of 21%, even if they are entirely staffed by Belgian lawyers. The current system has long been condemned for discriminating against the clients of overseas legal firms, particularly individuals, who find it harder to offset VAT against their own final tax bills.

According to reports in the legal media here, the Ministry of Finance review has come about as the result of Belgium's adoption of the EU Establishment Directive, which permits European lawyers to practice throughout the European Union under their home title.

Speaking to UK publication, Legal Week, Guido De Wit, tax partner at Linklaters - which recently merged with De Bandt, van Hecke, Lagae & Loesch to become Linklaters De Bandt - explained that: 'The VAT status of lawyers in Belgium is muddled. To avoid discrimination, a uniform application of VAT on services rendered by local and foreign lawyers ahould be achieved.'

The Ministry of Finance has said that it will announce the conclusions reached during the VAT review by the beginning of July.

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