Council of State attacks white cash register regulation

The Council of State has partially nullified the “white cash register” legislation. The Council finds that the so-called ten percent rule, which makes the white cash register obligatory for hotels, restaurants and cafés (horeca) that earn at least ten percent of their turnover from providing meals, is unlawful.

The introduction of “the registered cash register system” fits within the fight against social security and tax fraud in the horeca sector. Because the cash register meticulously records everything that is consumed in a specific horeca business, it is no longer possible for certain revenues not to be entered in the bookkeeping. In addition, each user of the cash register must be registered in the cash register with his SSIN number (Social Security Identification Number). This is not work time registration, exactly, but it does accurately indicate who worked at the cash register and when. The government is seeking in this way to curb undeclared employment. Every horeca business that has to use a registered cash register will be obliged to have one by 31 December 2015.

According to the Royal Decree of 15 December 2013, the introduction of such a cash register is only obligatory for hotels, restaurants and cafés where meals are consumed ´regularly´. The VAT administration decided within this framework to limit the application of the regulations to hotels, restaurants and cafés where at least ten percent of the turnover is earned from the meals consumed on the premises. Horeca Vlaanderen and Horeca Limburg turned to the Council of State in order to challenge the Royal Decree and the accompanying decision of the VAT administration.

Following the opinion of the auditor, the Council has ruled that a cash register regulation based on the criterion of ´regular´ provision of meals leads to a lack of clarity and arbitrariness that violates the constitutional principle of equality. In addition, the Council of State finds the ten percent rule to be unlawful, since the VAT administration is not competent to interpret the text of the Royal Decree of 15 December 2013 in this way.

This decision creates legal uncertainty. The nullification of the ten percent rule in principle means that ´all´ hotels, restaurants and cafés where food is served will have to introduce a white cash register. Minister Johan Van Overtveldt – in charge of combatting tax fraud - favours the extension to all hotels, restaurants and cafés. An exception would be made for horeca businesses that do not offer ´full meals´. Here the Minister is thinking of cafés where only snacks are offered, or chip stands without seating. Interest groups such as the Neutral Syndicate for Independents disagree with Van Overtveldt and ask that the Council’s criticism be overcome by enshrining the ten percent rule in the Royal Decree. A café that occasionally serves a grilled cheese sandwich or a bowl of spaghetti cannot, in their view, be compared to a restaurant.

The government now has the job of coming up with a legislative initiative that complies with the judgement of the Council of State.

For more information on this topic, you can consult Sébastien van Damme (author) and Sara Cockx (author and practice group head).