The winner doesn't charge VAT — and the contracting authority believes it without a single document in the file
The Flemish Region awards a contract to a temporary partnership that doesn't charge VAT on most of its bid because of a supposed 'flat-rate agricultural scheme' — but that justification turns out to be factually wrong and rests on no document in the file.
What happened?
The Agency for Nature and Forestry runs a simplified negotiated procedure for drawing up economic models for cooperation with farmers in nature reserves. Seven bids are received; four bidders are invited to submit a best and final offer. After final scoring, the temporary partnership EV ILVO and ABC Eco² vzw ranks first with 89 out of 100 points for a price of €85,948.28 VAT included. Land-Gewin comes second by one point with 88 points for €102,800.39. The gap is largely VAT: EV ILVO (the public-law entity of the Flemish institute for agricultural and fisheries research) charges no VAT on most of its services. The award report justifies this as: 'EV ILVO is entitled not to charge VAT on its services because it benefits from a flat-rate agricultural scheme.' Land-Gewin challenges before the Council of State. In its response, the Flemish Region suddenly offers a different rationale: EV ILVO isn't VAT-liable because it acts as a public authority (article 6 VAT Code), not because of any flat-rate agricultural scheme (article 57). The Council finds that the administrative file contains no document at all supporting the rationale set out in the award decision. The contracting authority apparently never investigated the actual legal basis for EV ILVO's VAT exemption. The Council suspends the award for breach of the duty to give substantive reasons: the decision rests on a factually incorrect motive, and the substitute rationale produced during litigation finds no support in the file either.
Why does this matter?
It looks like a technical VAT detail, but it goes to the heart of price evaluation. Article 24 of the then-applicable procurement act required contracting authorities to take into account, when comparing prices, anything that will certainly increase the costs — VAT included. If one bidder claims not to owe VAT, the authority cannot simply take that at face value: it must understand why and document the investigation. Otherwise it is comparing apples to oranges, which is exactly what the equal-treatment principle forbids. For bid managers, this is a familiar scenario: a competitor who looks structurally cheaper thanks to a fiscal advantage. For contracting authorities, the lesson is sharper still: a reason in your award report must match the documents in the file, not what you write in a court brief afterwards.
The lesson
If a bidder states in its offer that it doesn't have to charge VAT, request a formal supporting document before issuing the award decision (a tax ruling, an attestation from the Federal Public Service Finance, a reference to the specific legal basis). Put that document in the administrative file and cite it in the award report. If you skip this and your decision relies on the wrong legal article, you cannot fix that later in a court brief.
Ask yourself
If one bidder is structurally 15-20% cheaper because it doesn't charge VAT: does your file contain a document substantiating its VAT status, issued by or for the competent tax authority?
About this database
The Council of State (Raad van State / Conseil d'État) is Belgium's supreme administrative court. In disputes over public procurement — from contract awards to tenderer exclusions — the Council of State is the final arbiter. The rulings in this database are summarised by TenderWolf in plain language, with practical lessons for tenderers and contracting authorities. View all rulings →