Excluded for tax debt? A VAT credit relating to the closed quarter can save you — even if the document is dated after the opening
The City of Brussels excluded MW-Cars from a school transport contract because it had over €3,000 in tax debts on 7 January 2016 and its VAT declaration only reached the City on 18 January, but the Council of State suspends the exclusion: the €21,517.30 VAT credit related to a quarter closed before opening and therefore existed on the opening date.
What happened?
On 10 November 2015 the City of Brussels publishes a notice in the Bulletin des Adjudications for the transport of persons (mainly pupils) by bus and coach for various city departments, for sixty months, by open adjudication, divided into eight lots. The opening session is held on 7 January 2016. Four bidders submit offers, including MW-Cars (only for lot 7 — transport to the Centre de Santé), GEO Bustours, ABC-Cars and Eurobussing Brussels. On the same day the City queries Digiflow: MW-Cars has more than €3,000 in tax debts. By registered letter of 21 January 2016 the City asks MW-Cars to demonstrate within ten days that it has obtained payment terms or holds a counter-claim against a public authority covering its debt. On 5 February 2016 MW-Cars emails four documents: two NSSO attestations (31 December 2015 and 12 January 2016), a VAT attestation dated 18 January 2016 (showing a credit of €21,517.30) and an attestation dated 20 January 2016 stating that MW-Cars owes €3,607.68 in corporate tax (which it pays the same 5 February). On 17 March 2016 the City rules that all these documents post-date the 7 January opening, that the VAT credit 'only exists from 18 January' and that the late payment of corporate tax does not help — the relevant date is the opening. MW-Cars is excluded; ABC-Cars receives lots 1, 4 and 7. Lot 7 is awarded at €190,492.60 incl. VAT (vs. €421,784.60 for MW-Cars and an estimate of €540,000). The award is notified on 19 April 2016. MW-Cars files an extreme-urgency challenge on 4 May 2016: it does not fall under an exclusion ground (the VAT credit of €21,517 and an NSSO credit of €749 cover its tax debt 'within €3,000'), and subsidiarily ABC-Cars's price is abnormally low. The Council of State accepts the first branch. The critical document is the 'acknowledgement of VAT declaration' dated 5 February relating to the fourth quarter 2015 (closed on 31 December 2015). Although the balance was only established on 18 January 2016, the underlying receivable existed from 31 December 2015 — before opening. MW-Cars therefore prima facie demonstrated that on the opening date it held a certain, due and unencumbered counter-claim against the tax authorities exceeding its tax debt. The plea is serious in its first branch and warrants suspension. The second branch is not examined. The exclusion of MW-Cars and the award of lot 7 to ABC-Cars are suspended, with immediate execution and confidentiality of bids.
Why does this matter?
For bid managers with a tax debt this is one of the friendlier judgments. Contracting authorities that query VAT status within 48 hours of opening often miss one thing: a VAT or NSSO credit relating to a quarter or month already closed legally exists from the closing date — not from the date the official certificate is printed. Collect those documents — even later — and submit them in time before the award decision. For contracting authorities: the rule 'situation assessed on opening date' does not forbid later-issued certificates if they relate to an earlier period.
The lesson
If you have a tax debt above €3,000 on the opening date, look for counter-claims against contracting authorities or public undertakings (VAT credits, NSSO credits, outstanding invoices). The document evidencing the counter-claim may post-date the opening — provided the counter-claim itself legally existed on the opening date. A VAT credit relating to Q4 of the previous year suffices when opening is in January. Submit evidence within the deadline given by the contracting authority and in any event before the award decision (art. 63, §2, paragraph 3 of the RD on Procurement).
Ask yourself
Before bidding with a tax debt above €3,000: do you have a file containing (1) a VAT declaration for the last closed quarter before opening, (2) an NSSO balance, and (3) any outstanding invoices on government clients — and can you each time show that the receivable legally existed on the opening date even if the certificate was printed later?
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 →