VAT Exemption Scheme: the threshold is rising towards €30,000. But should you opt in?
The measure may appear attractive: the turnover threshold for eligibility under the VAT exemption scheme will finally be increased. More self-employed professionals and small businesses will be able to stop charging VAT and reduce their administrative obligations. The natural reaction may be to welcome the change and opt into the scheme. In some cases, however, that would be a mistake.
Being below the threshold does not necessarily mean that the scheme is advantageous for you. The exemption removes the right to deduct input VAT, exceeding the threshold has immediate consequences, and entering the scheme can trigger an unexpected VAT adjustment. Here is how to determine whether the exemption scheme is suitable for your business.
The timetable: from €25,000 to €30,000 in five stages
On 17 September 2026, the Belgian Chamber of Representatives adopted the bill increasing the threshold of the VAT exemption scheme for small businesses (Articles 56bis and following of the Belgian VAT Code).
The threshold, which has remained at €25,000 since 2016, will increase by €1,000 per year from 2027 onwards:
- €26,000 in 2027
- €27,000 in 2028
- €28,000 in 2029
- €29,000 in 2030
- €30,000 in 2031
This is therefore not an immediate increase, but a gradual rise over five years. For 2026, the threshold remains €25,000. The increase applies both to taxable persons established in Belgium and to taxable persons established in another EU Member State who apply the Belgian exemption scheme following the introduction of the cross-border scheme on 1 January 2025.
What the exemption scheme really means – and what it costs
The exemption scheme means that businesses do not have to charge VAT and benefit from reduced VAT reporting obligations. In return, however, they lose the right to deduct input VAT on purchases, equipment, investments and expenses.
It is a trade-off, not a gift. As long as your VAT-bearing business expenses remain low, the trade-off may be advantageous. But as soon as you start investing or purchasing significant amounts of stock, losing the right to deduct VAT can become costly and may outweigh the administrative savings.
Who benefits from the exemption scheme – and for whom can it become a trap?
The key factor is the nature of your customer base.
If you mainly invoice private individuals, not having to add VAT can provide a genuine pricing advantage: for the same net revenue, your service can be cheaper for the customer or your margin can be higher.
If, however, you mainly invoice VAT-registered businesses, the advantage largely disappears. Your customers would normally recover the VAT you charge them, meaning that the VAT-exclusive price is what matters to them. At the same time, you lose your own right to deduct input VAT.
In that situation, the exemption scheme essentially becomes an administrative simplification that is paid for through the loss of VAT deductibility. The profile that benefits most is therefore a low-cost service activity aimed primarily at private individuals. The profile that benefits least is a business that makes significant investments or mainly sells to professional customers.
Exceeding the threshold now has immediate consequences
Turnover must be monitored continuously rather than checked only at the end of the year.
The reform that entered into force on 1 January 2025 tightened the tolerance that previously existed when the threshold was exceeded. Exceeding the threshold can now have consequences during the year itself, and the transaction that causes the threshold to be exceeded becomes subject to VAT on its full amount, rather than only on the amount exceeding the threshold.
The exact application of any remaining tolerance should be assessed on a case-by-case basis, but the principle is clear: if you only check the threshold after the event, it may already be too late.
Attention should also be paid to how turnover is calculated. An ancillary activity, a one-off property transaction or even a simple recharge of costs may be enough to push turnover above the threshold.
The hidden cost: VAT adjustment when entering the exemption scheme
This is probably the least intuitive aspect of the system, and one that will become increasingly relevant as the threshold rises.
By expanding access to the exemption scheme, the new rules will make it available to taxable persons who are currently subject to the standard VAT regime and who may therefore previously have deducted VAT on investments.
However, entering the exemption scheme requires those deductions to be adjusted in the opposite direction. This means that VAT previously deducted on stock still held and on capital goods that are still within their VAT adjustment period must be repaid, proportionally to the number of years remaining in that adjustment period. The adjustment period is five years for movable capital goods and fifteen years, or in certain cases twenty-five years, for immovable property.
WHAT ENTERING THE VAT EXEMPTION SCHEME CAN COST
The situation
A self-employed professional fitted out business premises three years ago for €150,000 excluding VAT and deducted €31,500 of VAT. The VAT adjustment period for the property is fifteen years.
The switch to the exemption scheme
By opting for the exemption scheme, the professional must repay the VAT corresponding to the twelve years still remaining in the adjustment period, amounting to €25,200.
The scale of the impact
Entering the exemption scheme would therefore immediately cost €25,200, which is completely disproportionate to the administrative simplification initially expected. The same principle applies to movable capital goods that are still within their five-year adjustment period, although generally on a smaller scale.
The reverse is also true, and is more reassuring. A business leaving the exemption scheme, either because it exceeds the threshold or by choice, may recover VAT that it had previously been unable to deduct on stock and investments that are still within their adjustment period.
Changing VAT regimes is therefore never financially neutral, in either direction.
BEFORE OPTING FOR THE VAT EXEMPTION SCHEME
The exemption scheme is presented as a simplified VAT regime. In reality, it is also one of the regimes that can generate the most VAT adjustments. Before opting in, ask yourself three questions:
Is your customer base mainly made up of private individuals or businesses? This largely determines whether the scheme provides a genuine financial advantage.
Have you deducted VAT on recent investments that are still within their adjustment period? If so, entering the scheme may trigger a repayment of previously deducted VAT.
Is your turnover monitored continuously? This is essential to avoid unexpectedly exceeding the threshold during the year.
Catalyst can calculate the financial impact of the different options, including the cost of any VAT adjustment, and assist you in your discussions with the tax authorities.
In 30 seconds
✅ The VAT exemption threshold increases from €25,000 to €26,000 in 2027, followed by an additional €1,000 per year until it reaches €30,000 in 2031.
✅ The exemption means that you do not have to charge VAT, but you lose the right to deduct input VAT.
✅ It can provide a genuine advantage if your customers are private individuals; if your customers are VAT-registered businesses, the main benefit is administrative simplification.
✅ Since 2025, exceeding the threshold can have consequences during the year: the transaction that pushes turnover above the threshold becomes subject to VAT.
✅ Entering the exemption scheme requires VAT previously deducted on stock and investments still within their adjustment periods to be repaid.
✅ VAT adjustment periods: 5 years for movable capital goods and 15 to 25 years for immovable property.