In search of a thoroughbred: Can the government still rescue its VAT camel?

“I had a thoroughbred in mind, but we ended up with a rather ugly camel.”

With that image, Prime Minister Bart De Wever neatly captured the fate of Belgium’s VAT reform. What was meant to be a targeted and elegant budgetary measure ran aground after a sharply critical opinion from the Council of State.

The question is no longer just how to repair it, but whether the government is willing to return to simplicity.

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From broad strategy to political fine-tuning

Initially, two relatively clear options were on the table:

• Harmonising the 6% and 12% reduced rates into a single intermediate rate
• Raising the standard VAT rate from 21% to 22%

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Both scenarios were technically straightforward and fiscally powerful. Internal estimates suggested that a one-percentage-point increase in the standard rate could generate more than €1 billion in additional revenue.

Political reality, however, pushed the coalition toward more targeted measures. MR in particular resisted a general increase that would directly affect consumer prices.

In November, that position was explicit. On X, MR president Georges-Louis Bouchez wrote:

“With MR, promises are kept… no VAT increase, the shopping basket remains protected.”

That clear stance set expectations. Today, the VAT file is back on the table, while budgetary pressure remains. Finding a workable solution is proving more complicated than it appeared at the time.

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Council of State: not a fiscal art jury

Formally, the Council of State’s verdict was clear. The draft legislation failed to adequately justify why similar goods and services would be treated differently. Under the principle of equality, differentiation is allowed, but only with a solid, objective rationale. According to the opinion, that rationale was insufficient.

Behind that legal criticism lies a broader issue. Had the reform entered into force in its proposed form, the tax authorities would effectively have become both art director and freshness inspector.

In the cultural sector, VAT rates appeared to carry implicit value judgments. Certain performing arts would remain at 6%, while festivals and many concerts would move to 12%. As if the tax code had begun ranking genres.

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That is more than symbolic. Event organisers set ticket prices months in advance. A programming decision could suddenly determine the applicable VAT rate.

The camel had already grown another hump.

The takeaway food rules were equally puzzling. The applicable rate depended on concepts such as “ready for consumption” and limited shelf life. In practice, this could mean that a fresh pizza and a similar pizza with a longer shelf life would fall under different VAT regimes.

For lawyers, a nuance. For businesses, a headache.

What began as a streamlined budgetary measure risked turning into a system in which culture and freshness were fiscally categorised. And the more exceptions added, the more humps the camel acquired.

It was precisely at that point that the Council of State decided this camel could take no further step, however hard it was being marketed as a thoroughbred.

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Budgetary reality leaves little room

Meanwhile, Belgium’s federal deficit continues to widen. Recent multi-year projections show the consolidated deficit exceeding 5% of GDP by the end of the decade.

The VAT measures were expected to generate several hundred million euros. That revenue still needs to be found.

Within the governing majority, calls for simplicity are resurfacing. Business organisations such as VOKA have long argued for a coherent and stable tax framework rather than piecemeal adjustments. UNIZO similarly stresses that predictability is essential for companies making medium-term investment decisions.

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Which options remain realistic?

1. Back to 22%

Raising the standard rate remains the simplest and most legally robust option. From an administrative standpoint, implementation would be relatively straightforward, and the revenue yield would significantly exceed that of the abandoned measures.

Politically, however, it remains sensitive given earlier firm statements.

2. Reforming reduced rates

Harmonising the 6% and 12% rates into a single intermediate rate remains intellectually defensible from a simplification perspective. Yet this path affects sensitive sectors such as food, renovation and hospitality, making political support uncertain.

3. New targeted measures

Following the negative opinion, appetite for designing complex new exceptions appears limited. Legal robustness now weighs more heavily in the balance.

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Conclusion

The image of the thoroughbred turned camel is likely to endure. The ambition was clear; the execution proved fragile.

With sustained budgetary pressure and recent political commitments still echoing, the government faces a delicate balancing act. The coming weeks will show whether simplicity prevails, or whether the file once again becomes entangled in technical compromise.

One observation already seems widely shared: the more humps a VAT reform acquires, the harder it is to move forward.