Key takeaways
- The VAT unit lets several linked Belgian companies be treated as a single taxable person for VAT.
- It rests on article 4, § 2 of the VAT Code and royal decree no. 55 of 9 March 2007.
- Three cumulative links are required: financial, economic and organisational.
- Transactions between members fall outside the scope of VAT, but all members are jointly liable for the tax.
One taxable person for a group of companies
A group of Belgian companies that invoice services to each other charges, applies and recovers VAT on every internal flow. That back-and-forth weighs on cash flow and administration, while in the end it brings nothing to the State. The VAT unit in Belgium addresses exactly this situation: it lets several linked taxable persons form just one in the eyes of VAT.
The regime is not an informal tolerance: it has a precise legal basis. Article 4, § 2 of the VAT Code empowers the King to set up this treatment, and royal decree no. 55 of 9 March 2007 (Belgian Official Gazette of 15 March 2007) lays down the conditions. It came into force on 1 April 2007. This article explains what a VAT unit is, who may set one up, what it changes in practice and how it fits with the B2B e-invoicing mandate.
The three links to demonstrate
To form a VAT unit, the members must be closely linked to one another in three ways at once. These links are cumulative: showing one is not enough, all three must be present, and must stay present for the whole life of the unit.
The three cumulative links of royal decree no. 55
Financial link
A direct or indirect holding in another member's capital, or a common holding by the same shareholder. A holding that carries a majority of voting rights entails a presumption of control.
Economic link
An activity of the same kind, complementary or mutually influencing activities, or an activity carried on for the benefit of the other members.
Organisational link
Common management, activities organised in concert, or control exercised by a single person.
The financial link is the most closely examined. The administration accepts that it exists where a taxable person holds, directly or indirectly, a sufficient stake in another, or where a single shareholder holds a stake in both. A holding that confers a majority of the voting rights amounts to a presumption of control, hence of a financial link.
Who may, and who must, be part of it
Only taxable persons established in Belgium may become members of a VAT unit. The Belgian fixed establishment of a foreign company may join, but establishments located abroad are excluded, even those of a Belgian company. Exempt taxable persons and mixed taxable persons may join as well.
The regime is in principle optional: you must opt to set the unit up. One important nuance applies, however. Where a member directly holds more than 50% of another company, the three links are presumed to be met and that company is in principle required to join the unit. The presumption can be rebutted, but it reverses the logic: for subsidiaries held above 50%, joining is the rule and staying out the exception to be justified.
cumulative links
financial, economic and organisational
VAT on internal transactions
flows between members fall outside the scope
entry into force
royal decree no. 55 of 9 March 2007
What the VAT unit changes in practice
The central effect fits in one sentence: internal transactions between members are not subject to VAT. A group company that performs a service for another no longer applies tax on that flow and issues no invoice within the meaning of the VAT Code. For a group whose members recover VAT poorly (exempt activity, mixed taxable person), the saving in cash flow and non-deductible VAT can be real.
In return, the unit becomes a single taxable person towards the outside. It files a single periodic return gathering the transactions of all its members, receives its own VAT identification number, while each member keeps its enterprise number and receives a sub-number within the unit. The flip side of that solidarity: under article 51ter of the VAT Code, the members are jointly and severally liable for the unit's tax.
| Without a VAT unit | With a VAT unit | |
|---|---|---|
| VAT on flows between the group's companies | ||
| Invoice with VAT between members | ||
| VAT return per company | ||
| Own VAT number for each entity | ||
| Joint and several liability of members |
VAT unit and B2B e-invoicing
Since 1 January 2026, invoices between taxable persons established in Belgium must, in principle, be issued in a structured electronic format over the Peppol network. The VAT unit changes the scope of that obligation inside the group. Because internal transactions are not transactions subject to VAT, they do not give rise to an invoice within the meaning of the Code and therefore fall outside the structured e-invoicing obligation between members.
The obligation does, however, apply in full to external transactions, that is, invoices exchanged between the unit and third parties. It is the unit, through its members, that issues and receives those structured invoices. The point to check is therefore the correct identification of the entities: each member must be able to send and receive on Peppol under the right number. For the general framework of the obligation, see the Belgian legal framework for B2B e-invoicing.
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Benefits and limits to weigh
The VAT unit is not a neutral choice. It helps groups with many internal flows or with members that recover VAT poorly, but in return it imposes a duration commitment and a solidarity that have to be accepted. A member that opts in is in principle bound until 31 December of the third year following the unit's formation.
| Advantages | Limits | |
|---|---|---|
| No more VAT to pre-finance on transactions between members | ||
| A single periodic return for the group | ||
| A real gain when a member recovers VAT poorly | ||
| Joint and several liability of all members for the tax | ||
| Duration commitment until 31 December of the third year | ||
| Three links to show and keep up permanently |
Further reading
- Enterprise number and VAT number: what is the difference: how an entity is identified in Belgium.
- The legal framework for B2B e-invoicing: the obligation on 1 January 2026 and its legal basis.
- The periodic VAT return in Belgium: deadlines and how it works, which the unit centralises.
The reference source is authoritative: royal decree no. 55 of 9 March 2007 and article 4, § 2 of the VAT Code, commented on by circular AFER no. 42/2007 of the FPS Finance.
What is a VAT unit in Belgium?
A VAT unit is a regime that lets several taxable persons established in Belgium, legally independent but closely linked, be treated as a single taxable person for VAT. It rests on article 4, § 2 of the VAT Code and on royal decree no. 55 of 9 March 2007, which came into force on 1 April 2007.
What are the conditions for forming a VAT unit?
The members must be taxable persons established in Belgium and linked to one another financially, economically and organisationally. These three links are cumulative: all of them must be shown and must exist for the whole life of the unit.
Are transactions between members of a VAT unit subject to VAT?
No. Internal transactions between members of the same VAT unit fall outside the scope of the tax. They do not give rise to an invoice within the meaning of the VAT Code and therefore carry no VAT, which is one of the main advantages of the regime.
Is the VAT unit compulsory?
The regime is optional: you must opt to set it up. There is one exception: where a member directly holds more than 50% of another company, that company is in principle required to join the unit, unless the presumption is rebutted.
Does the VAT unit have its own VAT number?
Yes. The unit receives its own VAT identification number and files a single periodic return. Each member keeps its enterprise number at the Crossroads Bank for Enterprises and receives a sub-identification number within the unit.
