European Distribution Centers and regional warehouses

Are you starting logistics operations in Flanders or Europe? Below is the 4th of 5 possible business scenarios – ranging from a representative office to a fully-fledged international distribution center – for structuring your logistics activities.

Flanders — and particularly the province of Limburg — offers the high-rate logistics know-how and support we need.
Both the ports of Antwerp and Rotterdam are just around the corner.

Jaap Kohne

General Manager, Hyundai MOBIS Europe

Status

EDC (European Distribution Center) set up as a Belgian legal entity.
EDC owns goods, stored in regional warehouses.
EDC delivers VAS to regional warehouses and employs staff locally.
Possibility of setting up PEs (regional warehouses) of a Belgian entity in other EU countries.

Direct tax aspects

Belgian entity is taxable in Belgium.
Taxable profits of EDC can be determined on a cost-plus basis.
Upfront ruling can be obtained on low mark-up.
Belgian EDC can claim Notional Interest Deduction (FY2013: 3%) for equity invested in the Belgian PE.
Belgian EDC has no foreign PE if only storage activities in foreign countries, dependent on tax treaty; all profits are taxable in Belgium.
If deemed a foreign PE, arm’s length profit allocation is required; profit of a foreign PE is exempted in Belgium.

Indirect tax aspects

Belgian VAT registration is needed, full (VAT) bookkeeping obliged.
If goods are stored in regional warehouses in other EU countries, the Belgian EDC may need to register for VAT in those countries.
Supply of goods to Belgian, EU or non-EU customers by the Belgian EDC is in principle subject to VAT:
- VAT exemption is possible for intra-EU supply of goods and export supplies to non-EU.
- Local VAT is due if goods remain in Belgium.
VAT treatment of cross-border supplies depends on terms of supply.
To avoid pre-financing import VAT, an import VAT deferral license (a so-called ET 14.000 license) can be obtained without any cash guarantee. Align customs value to the transaction price.
A ruling in respect of classification, origin and customs value is advisable.
cross-border authorizations and centralized customs clearance.
Belgian input VAT can be deducted via the periodical VAT return
VAT credits are refundable on a quarterly basis; for “export” businesses, a license for monthly refunds is available.