Slaughter and May are first to rejoin VAT regime as Belgium begins to back downTAX CONCESSION: firms re-registration a step in the right direction, says Law SocietySlaughter and May is one of two firms to have re-registered for VAT in Brussels as the tide begins to turn on controversial plans to exempt European Union law firms including 32 English practices from the tax in Belgium.The firm de-registered as required by a Belgian tax circular at the start of the year but has successfully re-applied.

It is understood that the Central VAT Administration approved the decision.

The other firm is not thought to be a UK practice.Exemption means that firms can no longer claim back the VAT on goods and services they buy, effectively increasing their costs by 21% the Belgian VAT rate (see [2001] Gazette, 8 February, 6).

VAT deducted in respect of investment carried out during the past five years may also have to be repaid, penalising those firms which have expanded in that time.John Boyce, one of Slaughters two Brussels partners, said the firm had not come under as much pressure to de-register as others, but had done so because it was law-abiding.

The re-registration had been relatively straightforward, he added.Were definitely better off under the VAT regime, Mr Boyce said.In the wake of the circular, the English firms with offices in Brussels agreed to co-ordinate their lobbying efforts with the Belgian finance ministry and European Commission through the Law Societys Brussels office.A question has been laid in the Belgian Parliament seeking clarification over whether the circular will be withdrawn.

It is thought that the Central VAT Administration acted in the belief that it will be, but there is still caution until finance minister Didier Reynders makes a definitive statement.

This could come at any time.June OKeeffe, the Law Societys Brussels representative, said Slaughters re-registration was a step in the right direction, but that many firms remained in limbo because of an inconsistent application of the circular in different local VAT offices.

It seems like the Belgian government is looking for a solution, she added.Neil Rose