On October 5, 2018 the Belgian Minister of Finance issued a press release announcing that within the framework of the budget for 2019 the Belgian Government is adopting a package of legislative and other measures to generate an additional 150 million EUR in revenue, from the fight against tax fraud and a better tax collection.
According to the press release issued by the Belgian Minister of Finance the most important measures are:
· Process at the legislative level in order that tax authorities can no longer hand down rulings to companies operating in tax havens;
· Additional measures to detect capital hidden abroad as well as main cases of tax fraud:
o Fine for failing to declare a bank account / life Insurance;
o CRS & tax regularisation;
o Exchange of data with third countries;
o Legal constructions;
o Investigative powers;
o Confidentiality as regards request for information from foreign authorities;
o Efficient recovery;
· Improved collection of criminal fines;
· Tackling foreign temporary employment agencies and other types of fraud;
· Approach as regards fraud targeting domicile address;
· Stock options;
· Better cooperation with the taxpayer;
· Other various measures:
o A cooperation agreement has been concluded between the Special Tax Inspection, the National Bank and the FSMA in order to exchange data; and
o The Belgian Government is also looking for solutions in order for Belgian companies to be able to repatriate their foreign profits to Belgium and to invest them in the Belgian economy.
Process at the legislative level in order that tax authorities can no longer hand down rulings to companies operating in tax havens
Pursuant to the law, it will no longer be allowed to make an advance ruling if it involves transactions or situations that may be linked to tax havens.
Additional measures to detect capital hidden abroad as well as main cases of tax fraud
Fine for failing to declare a bank account / life Insurance
International intelligence have recently shown that a significant number of taxpayers (more than 100,000) have not declared their foreign bank accounts or life insurance. To encourage compliance, a suitable policy of sanctions will be established.
CRS & tax regularisation
The tax authorities analyse the information received as regards the bank accounts of Belgian citizens residing abroad via the Common Reporting Standard. It often leads to the identification of black money, which means money the tax administration is unable to tax because of the period of limitation. This black money can still be regularised via a system specifically set up for this purpose. However, in practice, it appears that not everyone is willing to regularise this black money. Nonetheless, the judicial power may start proceedings as regards this black money, considered as a money laundering offence. It will take further initiatives to reinforce the fight against tax fraud undertaken by public prosecutors.
Exchange of data with third countries
The exchange of data registered in the ultimate beneficial owner register (UBO register) is currently possible only between Member States of the European Union.
In order to comply with international obligations and in accordance with OECD standards, the exchange of data has been extended between Belgium and jurisdictions outside the EU, with whom there is a legal basis to exchange information.
The international scope of some kinds of fraud justifies an extension of the tax deadline if a taxpayer makes use of legal constructions in a tax haven. The tax deadline has been extended to 10 years.
At present, within the context of an inspection, the right to question an individual and conduct an investigation can only be exercised by a senior official. It means that in practice, many officials cannot fully carry out their investigative duties. The regulations have now been adapted to the practical needs, so that officials of the FPS Finance can carry out their duties optimally.
Confidentiality as regards request for information from foreign authorities
To ensure that international investigations are successful, the VAT Code also deviates from the obligation of passive disclosure as regards requests for information, the responses sent, and correspondence between the competent authorities, unless the foreign State has expressly given its consent for its diffusion.
In order to increase the efficiency of requests for international assistance as regards tax recovery, the Collection and Recovery department has been granted access to intelligence received through the international exchange of information.
Improved collection of criminal fines
Despite the progress made in recent years, the collection of criminal fines can still be improved. Nevertheless, organised criminals can make their assets disappear in various ways before the prosecutor can seize them and the tax authorities can collect them.
In order to move things forward, a protocol will be established between the Minister of Finance and the Minister of Justice. To this end, the judicial power will continue to make progress as regards digitisation and an efficient transmission of data to the tax authorities.
Tackling foreign temporary employment agencies and other types of fraud
Thanks to a better joint analysis of the databases of the tax authorities and the National Social Security Office, the fight against abuses committed in foreign temporary employment agencies, among other places, is being reinforced. Other types of fraud can also be effectively fought against within the context of social dumping, which have tax consequences.
Approach as regards fraud targeting domicile address
International intelligence are useful for detecting fraud targeting domicile address. By cross-checking these data with the data in the national register, inconsistencies as regards domicile address can be detected more quickly.
Within international groups, a foreign parent company may grant stock options or other benefits in kind to employees of a Belgian subsidiary.
At present, there is no obligation to withhold the withholding tax on this remuneration, nor is there any obligation to provide certain information on this subject to the tax authorities. Therefore, such remuneration sometimes eludes taxation. This problem will now be resolved by legislative intervention, so that this revenue cannot avoid taxation.
Better cooperation with the taxpayer
Preparations have been made to start "horizontal supervision" this autumn. This is a new and modern cooperation system between the tax authorities and enterprises, in which the approach will be proactive rather than reactive. An extension intended to SMEs will be launched next year. To avoid situations where third parties are unaware of their obligation to provide information, the penalties for non-cooperation have been reinforced and brought into alignment with those of neighbouring countries.
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