As the latest sales period comes to an end, retailers can now for the first time donate any unsold merchandise without suffering a tax disadvantage.
The change comes from a change to the law from May this year, which allows retailers to donate unsold stock to charity organisations without having to pay VAT, which was the case in the past.
When a shop orders stock, it pays VAT on the goods which it will then recoup when selling to a client. However if the goods are given away, for example to a charity, the VAT paid cannot be reclaimed, and is therefore lost. Until now, the possibility of reclaiming the VAT on donations was restricted to the food industry. The new law in May extended the measure not only to the clothing industry but also to hygiene products, basic medicines, products for babies and small children such as nappies and school and office supplies.
According to the union for the self-employed, one in five of just over 1,000 retailers surveyed have already taken advantage of the new rule, with more expected to follow. The summer sales period ended this year with results described as “disappointing,” with sales values up only 1% on last year at the same time. Belgium has two legal sales periods, in January and in July.
“Retailers prefer to do a favour for someone who really needs it, rather than see their stocks destroyed,” the union said. “There will always be stocks, so its a good thing to be able to give a second life to as many clothes and shoes as possible, and so to avoid throwing them away.”
Although one in five with more to follow is a respectable figure, the union expects the next sales period in January to be even more successful, as many retailers are not yet aware of the change to the law.
The Brussels Times