Overview of the latest tax news
UBO register: information to be reported by 30 November 2018 at the latest
10 September 2018
The Royal Decree of 30 July 2018 (published on 14 August 2018) defines the implementation modalities for the 'register of ultimate beneficial owners' (the 'UBO register'). Among other things, the Royal Decree stipulates which information must be communicated about the UBOs of companies, associations, foundations and trusts. The Royal Decree will enter into force on 31 October 2018 and, as a general rule, UBO information must be communicated by 30 November 2018 at the latest.
Constitutional Court rules on Income Tax and VAT dawn raids
13 October 2017
In a decision issued on 12 October 2017, the Constitutional Court ruled on the topic of dawn raids carried out by the tax authorities, following a preliminary referral. The Constitutional Court was asked whether the tax authorities’ broad interpretation with regard to dawn raids could be reconciled with the right to privacy and the “inviolability of the home”, as protected by articles 15 and 22 of the Belgian Constitution and article 8 of the European Convention on Human Rights.
The Constitutional Court ultimately decides that the relevant legal provisions (i.e. article 319 of the Belgian Income Tax Code and article 63 of the VAT code) do not violate the right to privacy and the inviolability of the home. The Court does however set out some boundaries, making it clear that the tax authorities do not dispose of an unconditional and unlimited right to access and search the professional premises of a taxpayer.
Belgium implements the fourth anti-money laundering Directive - including UBO-register
10 October 2017
On 6 October 2017, a new law on anti-money laundering, counter terrorism financing and the use of cash was published in the Official Journal. The law transposes the fourth Directive on anti-money laundering (‘AML 4’) and the updated recommendations of the Financial Action Group into national law, while replacing the previous law of 1993 on anti-money laundering.
The most important change is the creation of a national Ultimate Beneficial Owner register (‘UBO-register’). Belgian companies and other legal entities must collect the necessary information on their beneficial owner(s), which is recorded in the UBO-register.
The Fiscal Mediation Service’s strengthened role
31 July 2017
The Fiscal Mediation Service of the Federal Public Service Finances can intervene, upon a taxpayer’s request, in case of an ongoing dispute between the taxpayer and the tax authorities. For example, when a taxpayer filed a claim against a tax assessment and the negotiations in the administrative phase show a continued discordance.
The Fiscal Mediation Service will try to find a possible compromise between the taxpayer and the tax authorities and will evaluate the arguments of both parties. Although the Fiscal Mediation Service does not guarantee a binding solution for the dispute, a compromised solution is found in 70% of the cases. Moreover, the mediation will result in a report in which the Fiscal Mediation Service expresses its own views on the dispute.
One of the current weak spots is that the Fiscal Mediation Service’s competency is strictly limited to the administrative phase. A (negative) decision of the involved tax administration during the fiscal mediation ends the process and forces the taxpayer to initiate judicial proceedings.
A new law now remedies some of these flaws and strengthens the role of the Fiscal Mediation Service.
New developments in international exchange of information
24 May 2017
The OECD recently published an updated list of automatic exchange relationships established between tax authorities implementing Country-by-Country Reporting (“CbC Reporting”), under the BEPS Action 13 minimum standard.
On 16 May 2017, the Grand Chamber of the European Court of Justice ruled a judgment that offers taxpayers more legal certainty in the field of international administrative cooperation and the exchange of information, as laid down in Directive 2011/16/EU.
On 10 April 2017, a bill containing measures against tax fraud was submitted before Parliament. In essence, the proposed measures aim at ensuring that Belgium complies as much as possible with its international obligations regarding the exchange of information. The bill has now reached the stage where it was approved by the relevant commission.
Stolen financial data can be used by the public prosecutor’s office
11 April 2017
The Court of Cassation recently judged that the Belgian public prosecutor’s office is allowed to base its investigation into major tax fraud on stolen financial data (in this case from the Liechtenstein LGT Bank). This judgment runs parallel to a judgment by the European Court of Human Rights in October 2016, which also concerned the data stolen from LGT Bank.
CJEU AG opines fairness tax partly incompatible with EU law
21 November 2016
On 17 November 2016, Advocate General (AG) Kokott of the Court of Justice in the European Union (CJEU) issued her opinion on the Belgian constitutional court’s preliminary ruling request relating to the compatibility of the “fairness tax” with primary and secondary EU law.
More flexibility when filing administrative appeals
15 September 2016
On 3 August 2016, a law was adopted easing the requirements when filing an admissible administrative appeal. According to the Belgian Income Tax Code, an administrative appeal against a federal tax assessment in direct taxes must be filed with the ‘general advisor’ (‘adviseur-generaal’/‘directeur’) of the local tax administration responsible for assessing income taxes, within six months after the assessment note was sent to the taxpayer.
The Panama Papers and the future of international tax transparency
28 April 2016
A group of international journalists has obtained information concerning several thousands of “off shore” companies based in multiple tax havens, including the identity of the ultimate beneficial owners. Tax authorities in several countries have vowed to act on this information. However, this material may just be the tip of the iceberg compared to the information that will be available to tax administrations from next year onwards, following the application of the Common Reporting Standard.
VAT and directors: 21% rate from 1 June 2016
4 April 2016
As of 1 June 2016, director's fees are subject to VAT in Belgium. Tax authorities explained in the decision of 30 March 2016 how the new rules have to be applied and what alternatives are possible to mitigate potential VAT costs (e.g. certain VAT exemptions, VAT grouping rules, etc.). This newsflash summarises the decision.
Annulment of internal instruction concerning undeclared income: ineffective measure?
25 March 2016
During the week of 14 March 2016, it was announced that the Council of State annulled the so-called ‘internal instruction’ concerning the spontaneous regularisation of undeclared income with the tax administration. Some press articles suggested that taxpayers who had disclosed undeclared income based on the principles set out by this internal instruction could now face even higher fines.
Belgian Cayman Tax - update
15 January 2016
Less than 1 year after its conception, the Cayman Tax was apparently already up for amendments. Published on 30 December 2015, the Law on job creation and purchasing power (Tax Shift Law) of 26 December 2015 already modifies to the Cayman Tax legislation. The Royal Decree listing the EEA legal arrangements in scope was also modified (Belgian Official Journal of 29 December 2015).
Speculation tax: draft law published
18 December 2015
The draft law regarding the reinforcement of job creation and purchasing power introduces the so-called “speculation tax” (art. 90, 13° ITC. and Art. 228, §2, 9° ITC). It should be noted that the final version of the text may deviate from the version currently published.
Reduced VAT renovation rate: transitional measures until 2017
3 December 2015
As from 1 January 2016, the reduced VAT rate of 6% will only apply on buildings older than 10 years instead of the current 5 years. The Belgian Finance Minister foresees transitional measures for buildings aged between 5 and 10 years.
The year of the Cayman
28 July 2015
The long awaited look-through tax, also referred to as the ‘Cayman tax’, has finally been adopted by the Belgian Federal Parliament on 24 July 2015. After the Program Law is published in the Belgian Official Journal, it will apply on income received, attributed or made payable by legal arrangements as of 1 January 2015.
Tax Shift and Budget 2016 Agreement – Detailed overview of measures
27 July 2015
This newsflash provides an in-depth overview of the measures in the Tax Shift and Budget 2016 Agreement reached by the Belgian Federal Government on 23 July 2015. The below information should be treated with caution, as many questions remain open. In addition, for some of the measures, conflicting information circulates in the (financial) press.
Imminent Belgian “look-through tax” on income from legal constructions
9 April 2015
The so-called look-through tax (doorkijkbelasting or impôt de transparence), also referred to as the “Cayman tax”, was announced in the Government Agreement of 9 October 2014. Although the tax itself (once submitted to Parliament, voted and published) will be new, it was not really unexpected.
It all started with the reporting obligation introduced by the previous government, which wanted individuals to disclose, as of tax year 2014, if they are the founder or (potential) beneficiary (spouse, legal cohabitant, and minor children included) of a so-called ‘legal construction’ (Art. 307, §1, 4th ind. ITC).