VAT exemption scheme: do you have to charge VAT as a small business?
You are starting out as a self-employed person or running a small activity on the side, and your turnover is still modest for now. Do you really have to add 21% VAT to your invoices, file a return every quarter and remit the VAT? For many small businesses the answer is: no. The VAT exemption scheme lets you invoice without VAT — with less admin as a result. But the scheme also has a downside, and a few pitfalls you would do well to know in advance.
What is the VAT exemption scheme?
The VAT exemption scheme (also known as the "small business scheme") is a simplified VAT regime for businesses with limited turnover. If you qualify, you:
- charge no VAT to your clients;
- do not have to file periodic VAT returns;
- do not have to remit VAT to the Treasury.
That sounds attractive, and often it is. But there is one important condition in return: you may not deduct the VAT you pay to your own suppliers. You also remain a VAT-taxable person — so you keep your VAT number and a number of invoicing and bookkeeping obligations still apply.
Important to understand: "exempt" here means exempt from charging and remitting VAT, not that you fall outside the VAT system.
Who does the scheme apply to?
You can apply the exemption scheme if your annual turnover does not exceed 25,000 euros (excluding VAT). The legal form of your business plays no role: a sole proprietorship, a company or a liberal profession can all use it.
The scheme is not open to everyone, though. Excluded are, among others:
- VAT groups;
- businesses active in immovable work (a large part of the construction sector);
- hospitality businesses required to use a registered cash register (the "white cash register" system);
- the supply of used materials.
Certain specific transactions are also excluded, while the business can still keep the scheme for its other activities. Not sure whether your activity falls outside it? Check with your accountant before you make the choice.
What does it change in practice for your invoices?
This is where the exemption scheme is most visible. Your invoice shows no VAT amount. Instead, you add a mandatory mention that makes clear why no VAT is charged, for example: "Special exemption scheme for small businesses".
All the other mandatory mentions on a Belgian invoice still apply: your company number, the invoice date, a sequential number, your client's details, the description of your service and the amount. Only the VAT line disappears.
For your client this is an advantage: they pay no VAT on top of your price. If you work mainly for private individuals, your price makes you more competitive as a result. If you work mainly for VAT-taxable businesses, the advantage is smaller — those clients recover the VAT anyway.
The downside: no VAT deduction
The exemption is not a free lunch. Because you charge no VAT, you also cannot reclaim the VAT on your own purchases. And that can weigh heavily if you invest a lot.
An example. In your first year you buy 10,000 euros' worth of materials and equipment, with 2,100 euros of VAT. Under the normal VAT scheme the tax authorities refund you those 2,100 euros. Under the exemption scheme they do not — that VAT is a pure cost for you.
The rule of thumb: the exemption scheme is attractive if you have few costs with VAT (typically for services, consulting, coaching) and sell mainly to private individuals. If you have many purchases or large start-up investments, the normal scheme — with the right to deduct — is often more advantageous, even though it means more admin. For someone starting a side business with few costs, the exemption is by contrast often the logical choice.
What if you go over 25,000 euros?
The threshold is not a wall you slam into. The rules are nuanced:
- Exceeding by no more than 10% (up to 27,500 euros): you may keep the exemption scheme for the current calendar year. Only on 1 January of the following year do you switch to the normal VAT scheme.
- Exceeding by more than 10%: you fall under the normal scheme immediately, from the transaction that pushes you over 27,500 euros. From that invoice on, you charge VAT.
If you start during the year, the threshold is reduced pro rata to the number of days remaining. If you start on 1 July 2026, for instance, the 25,000-euro threshold is reduced to about 12,603 euros for the second half of the year. If you estimate your turnover higher for that period, you are not eligible for the exemption in 2026.
Another detail that surprises people: if you leave the exemption scheme, you can only return from 1 January of the second year following your change. Switching is therefore not a decision you reverse every quarter.
How do you opt for the scheme?
You arrange this via the e604 application in MyMinfin (declaration of commencement, change or cessation of activity). If you want to switch to the exemption scheme, fixed moments apply:
- before 15 March, to apply the scheme from 1 April;
- before 15 June, to apply it from 1 July;
- before 15 September, to apply it from 1 October;
- before 15 December, to apply it from 1 January of the following year.
If you start a new activity, you request the exemption directly in your e604A.
And don't forget this: even as an exempt business you must submit a client listing via Intervat each year by 31 March — the total amount of your turnover for the past year. Even if you have nothing to declare, you submit a nil listing. Periodic returns therefore disappear, but this annual obligation remains.
And sales in the rest of Europe?
Since 1 January 2025 the scheme has been modernised and extended to the whole European Union. Previously the Belgian exemption applied only to your Belgian turnover; if you sold to a private individual abroad, you did have to charge VAT there.
With the new SME scheme, you can under conditions apply the exemption to your sales in other EU member states too, as long as:
- your total turnover across the whole EU stays below 100,000 euros, and
- you stay below the national threshold of each country where you sell (which varies from one member state to another).
Anyone using this must report their turnover quarterly to the Belgian VAT administration. For small web shops or service providers who occasionally sell across the border, this is a welcome simplification.
Note: the threshold may still rise
There is a proposal on the table to raise the turnover threshold from 25,000 to 30,000 euros. This measure is included in a draft programme law, but as of now it is not yet voted and therefore not yet in force. As long as the law is not published in the Belgian Official Gazette, the threshold remains at 25,000 euros. Keep an eye on it if your turnover hovers in that range — and base your decisions until then on the amount that applies today.
Exempt from VAT, but not from e-invoicing
A misunderstanding we hear often: "I don't charge VAT, so this e-invoicing obligation doesn't apply to me." That is not correct.
You remain a VAT-taxable person, which means that mandatory e-invoicing in Belgium has also applied to you since 1 January 2026. For your B2B invoices you must therefore be able to receive and send structured e-invoices via the Peppol network — even if there is no VAT amount on them. A PDF by email no longer suffices.
The exemption scheme therefore frees you from VAT returns, but not from e-invoicing. Good invoicing software handles the latter without you having to think about it.
Here's how to do it with Cleero
With Cleero you create invoices that are correct right away — with or without VAT. If you work under the exemption scheme, Cleero automatically adds the right mention to your invoice instead of a VAT amount, and you send your invoices as e-invoices via Peppol. If you later go over the threshold and switch to the normal scheme, you adjust that in a few clicks.
That way you stay compliant, whether you have just started or have just crossed the 25,000-euro mark.
Try Cleero for free — no credit card required.