Tax law news

Direct attribution method: Practical details published–take advance of the tolerance period to prepare 

03 February 2023

The Belgian tax authorities on 19 January 2023 issued practical guidance (Dutch | French) on the application of new rules on the direct attribution method for VAT deduction (“werkelijk gebruik”/“affectation réelle”), published in the Royal Decree of 26 October 2022 (Dutch | French) and applicable as from 1 January 2023. The replacement of the advance approval requirement with a notification procedure may provide affected taxpayers with less certainty over their VAT recovery position; however, an initial one-year tolerance period has been introduced. We recommend that businesses use this period to analyse the applied VAT deduction and to make timely adjustments or to consult the tax authorities if necessary.

New EU tax reporting obligations for digital platforms implemented

03 January 2023

On 15 December 2022, the Belgian Chamber of Representatives approved legislation amending the Income Tax Code to implement new EU reporting obligations for digital platforms as from 1 January 2023. Draft legislation imposing new obligations for payment service providers as from 1 January 2024 is expected to be presented to parliament by the end of January 2023.

New requirements apply to the direct attribution method for VAT deduction from 2023

29 November 2022

On 10 November 2022, the Royal Decree of 26 October 2022 (Dutch I French) was published in Belgium’s official journal, providing detailed new rules on the direct attribution method for VAT deduction (“werkelijk gebruik”/“affectation réelle”), that can be applied by certain partially exempt (“mixed”) VAT taxpayers. Key changes include a new procedure, applicable as from 1 January 2023, for affected taxpayers to notify the Belgian VAT authorities of their decision to use the direct attribution method, and an obligation to provide key information on a yearly basis relating to the VAT deduction. While the objective of the new measures is to reduce the administrative burden by using digital communication channels, the higher level of transparency available to the tax authorities means that affected taxpayers will need to take into account the additional obligations and potential increased scrutiny of their use of partial exemption arrangements.

Belgian landmark case on wage withholding tax exemption for R&D – continued

18 November 2022

On 28 October 2022, the Belgian tax administration filed an appeal with the Supreme Court against a milestone judgment obtained from the Ghent court of appeal by Deloitte Legal for a client on 24 May 2022 (see Newsflash of 28 June 2022), regarding the wage withholding tax exemption for R&D (art. 275³ ITC). The judgment confirmed some valuable principles that are of importance to taxpayers making use of the exemption.

Constitutional Court reviews and annuls aspects of law on annual tax on securities accounts

28 October 2022

In its judgment of 27 October 2022, the Constitutional Court ruled on the various annulment appeals brought against the Law of 17 February introducing an annual tax on securities accounts. Although the tax in itself is not annulled by the Court, and will thus continue to exist, the specific anti-abuse provisions and the retroactive entry into force of the general anti-abuse measure were found unconstitutional and annulled.

Government aims to extend investigation and assessment periods

11 October 2022

The draft bill containing various tax and financial provisions of 3 October 2022 covers a wide range of tax measures, mainly impacting procedural aspects. This newsflash addresses the most notable proposed legislative changes in the framework of income taxes.

Draft bill containing changes to the VAT procedural rules introduced in the Chamber of Representatives

10 October 2022

On 3 October 2022, a draft bill containing various tax and financial provisions was introduced in the Chamber of Representatives. This draft bill contains some remarkable proposals to change the VAT procedural rules.

Reduction of VAT penalties by the court: no prior application for annulment required

7 October 2022

In its judgment of 23 September 2022, the Belgian Court of Cassation ruled that, even if a taxpayer did not apply for an annulment according to Article 9 of the Regent’s Decree Nr. 78 of 18 March 1831, the Court can still check the legality of the imposed sanction with “full jurisdiction” and reduce or waive the penalty.

VAT credit on the VAT current account does not expire

13 July 2022

In its judgement of 17 June 2022, the Belgian Court of Cassation ruled that VAT credit on a VAT current account does not expire. With this judgement, the Court of Cassation confirms an earlier judgement of the Court of Appeal of Liège. The Belgian VAT authorities’ viewpoint was rejected, again.

Drastic change in VAT treatment of furnished accommodation as from 1 July 2022: tax authorities provide first clarifications 

30 June 2022

On June 15, 2022, the tax administration published a FAQ regarding the new regulations on the provision of furnished accommodation that makes rentals of less than three months subject to VAT. 

Belgian landmark case on wage withholding tax exemption for R&D

28 June 2022

On 24 May 2022, Deloitte Legal obtained a milestone judgment from the
Ghent court of appeal for one of its clients regarding the wage withholding tax
exemption for R&D (art. 275³ ITC). In the judgment, the court confirmed some
valuable principles that are of importance to taxpayers making use of the
exemption.

Evidence unlawfully obtained during a visit from the tax authorities is not necessarily excluded

20 May 2022

In a recent verdict, the Court of Cassation opposes to the automatic exclusion of evidence illegally obtained by the tax authorities, even when gathered during a visit of the taxpayer’s private premises without proper authorisation from the police court. The use of the evidence can only be excluded if the so-called “Antigone test in tax matters” requires such a sanction. The verdict underlines the importance of a taxpayer’s preparedness when facing tax audits in general and unannounced visits from the tax authorities in particular. Deloitte Legal’s Tax Audit Readiness offering can make an impact that matters.

Declaration of payments to tax havens: Tax audit wave

6 May 2022

Since tax year 2011, Belgian companies are required to declare payments of minimum EUR 100,000 made directly or indirectly to recipients  established in so called ‘tax havens’. The aim is to make those payments more visible for the tax authorities and to facilitate tax audits.

The tax audit wave recently initiated demonstrates that the Belgian tax administration thoroughly investigates the declared payments. This is in line with the government's action plan for combating tax and social fraud of 1 April 2022. In its action plan, the government considers the rules regarding payments to tax havens as an efficient measure against tax fraud.

The first audits show that the tax administration easily considers payments that do not meet the deductibility requirements as non-deductible by applying a stringent administrative position.

Second action plan to combat international and complex tax fraud

29 April 2022

Recently, a second action plan to combat tax fraud was launched under the supervision of the Belgian minister of finance. The plan focuses on international tax aspects and proposes several points of action to make the fight against tax fraud more effective. Two noteworthy measures with regard to tax procedure are the prolongation of the existing periods of investigation and assessment and the possibility to impose penalty payments to reinforce cooperation during a tax investigation. Neither of these are obvious measures.

CJEU ruling enhances legal certainty for taxpayers on VAT fixed establishment concept

11 March 2022

The Court of Justice of the European Union (CJEU) on 7 April 2022 released its judgement in the Berlin Chemie case (C-333/20) on the concept of a fixed establishment for VAT purposes. The case had been referred to the CJEU by the Curtea de Apel Bucureşti (Court of Appeal, Bucharest). The CJEU ruled that a subsidiary providing exclusive marketing and publicity services to a group company acting as central entrepreneur does not create a fixed establishment for VAT purposes of the central entrepreneur in the subsidiary’s country of residence. In its considerations, the CJEU explicitly acknowledges that the same resources cannot be used simultaneously by the subsidiary to provide services and by the foreign group company to receive those services. The ruling provides clear guidance for tax authorities around Europe to define their position on the VAT fixed establishment concept, which hopefully will restore legal certainty for taxpayers.

New EU rules on reduced VAT rates lead to changes in Belgium

7 March 2022

On 5 April 2022, the European Council formally adopted Council Directive (EU) 2022/542 introducing reforms to VAT rates. Under the new rules, that were agreed in December 2021 and endorsed without changes by the European Parliament, EU member states are able to apply reduced VAT rates and even a super-reduced or zero VAT rate to an updated and extended list of supplies (see Deloitte Belgium’s VAT alert dated 9 December 2021). The new directive amends Directive 2006/112/EC on the common system of VAT (the European VAT directive) and Council Directive (EU) 2020/285 concerning the special scheme for small enterprises and applies as from 6 April 2022, its date of publication in the Official Journal of the European Union.

Renewed collaboration between Belgian Tax Authorities, Public Prosecutor and Police in the form of MOTEMs

23 February 2022

A recent legislative proposal sets out the legal framework to allow for a new form of active collaboration between Belgian Tax Authorities, Public Prosecutor and Federal Judicial Police. This collaboration will take the form of MOTEMs or Multidisciplinary Teams of Investigation. These highly specialised teams will conduct investigations regarding serious tax fraud and money laundering, amongst others. Are MOTEMs stepping away from the principles of the 1986 Taxpayer Charter and the fundamental rights of defence?

Long awaited reform of EU VAT rates agreed by European Council

9 December 2021

On 7 December 2021, the Council of the European Union agreed the text of a
proposed directive on reforms to EU VAT rates that have long been debated.
Under the new rules, member states would be able to apply reduced VAT rates
and even a super-reduced or zero VAT rate from a renewed and extended list
that would replace both the existing list (dating back to a directive from 1992)
and derogations granted to individual member states. The proposals must be
endorsed by the European Parliament before the Council can formally adopt
the directive.

Belgian Minister of Finance confirms intention to implement mandatory B2B einvoicing

15 November 2021

In accordance with the announcements in the 2022 budget agreement,
Belgium’s Minister of Finance Vincent Van Peteghem released a policy note on
29 October 2021 reaffirming the intended implementation of an e-invoicing
mandate for business-to-business (B2B) transactions in the near future.

VAT fiscal representative: new calculation method for the financial guarantee towards tax authorities

26 August 2021

New rules will apply for calculation of the financial guarantee when a fiscal representative is appointed as from 1 October 2021. The financial guarantee, which must always be provided, will be set at 10% of the annual VAT balance due, with a minimum of EUR 7,500 and a maximum amount of EUR 1,000,000. Royal Decree 31 has been amended to reflect the new rules (Dutch | French).

Demolition and reconstruction: VAT-authorities publish updated FAQ

14 June 2021

The generalised application of a reduced VAT rate of 6% for the demolition and reconstruction of dwellings has entered into force since 1 January 2021. The main novelty is that the scheme allows, until 31 December 2022, the sale of reconstructed dwellings throughout Belgium with a 6% VAT rate. The VAT-authorities now published an updated version of its 'FAQ' on 3 June 2021 (see also our earlier VAT Alert). This update contains a number of new views and clarifications (Dutch | French).

Supreme Court confirms limitation of VAT deduction on publicity and estate agency fees on split sales of land and buildings

11 June 2021

In a judgment dated 21 May 2021, the Supreme Court decided that, in the context of the Vos Aannemingen case, the VAT authorities had rightly limited the deduction of VAT on publicity and estate agency costs paid by the construction company in a split sale structure (land sold by the landowner and buildings sold by the construction company/building company). However, the Court did not rule on the extent to which the deduction of VAT on such costs should then be limited. 

No fixed establishment for VAT when a foreign based company rents out immovable property without own staff

8 June 2021

On 3 June 2021, the Court of Justice of the European Union (CJEU) issued its ruling in the Titanium Ltd case (C-931/19), regarding the question whether renting out real estate can qualify as a fixed establishment for VAT.  In a bold and clear judgment, the Court confirms that there is no fixed establishment if no own personnel is in place.

Can customs authorities also claim VAT?

18 March 2021

The Court of Justice of the European Union (CJEU) brought further clarity to situations where a certain Member State’s customs authorities claim VAT in addition to customs duties. In each post-recovery case, one should check whether the Member State that can recover customs duties can also recover VAT.

Tax authorities launch new wave of foreign account audits. How far can they go back?

18 May 2020

Many taxpayers recently received a questionnaire from the tax authorities concerning their foreign financial accounts and holdings. The tax authorities ask extensive questions about foreign accounts, foreign life insurances and real estate abroad. Furthermore, in many cases, the authorities request information for income years dating back to 2012. Is such a position in line with the statute of limitations on tax audits and investigations?

Optional VAT on immovable letting also subject to registration fee

26 March 2020

Following the amended VAT legislation on the letting of real estate that entered into force on 1 January 2019, the administration competent for real estate transfer tax has confirmed that the registration of a lease agreement that opts for the application of VAT is in principle (also) subjected to the proportional registration fee of 0.20%.

New VAT rules for companies without legal personality

28 January 2020

Following the new company code's recent entry into force, the VAT administration published a (short) commentary relating to partnerships and de facto associations. The new VAT regime can have important consequences in practice.

Taxation of gains due to amended urban planning requirements updated

22 January 2020

A new Flemish Decree has recently updated the existing rules on the taxation of gains due to amended urban planning requirements. In addition, the rules on the compensation that is due when landlords suffer damages resulting from amended urban planning requirements have been adjusted.

Benefit in kind for housing: Constitutional Court asked to rule on admissibility of ex officio relief request

17 October 2019

On 7 October 2019, the Antwerp Court of Appeal referred a question to the Constitutional Court regarding the application of ex officio relief on the benefit in kind amount for housing. If the Constitutional Court were to rule in favour of the plaintiff, this would effectively confirm that taxpayers can reclaim overpaid taxes on the benefit in kind for housing from the previous five years.

Tax audit wave on foreign investment income (U.S. FATCA - CRS)

22 July 2019

As a result of FATCA (Foreign Account Tax Compliance Act) and CRS (Common Reporting Standard), Belgian tax authorities receive information from other countries, regarding financial accounts held by Belgian residents in other jurisdictions.

Tax authorities paying closer attention to capital increases and decreases

19 July 2019

As mentioned recently in the Belgian press, companies undergoing a capital decrease after an initial capital increase will be a focus point for the tax authorities in the next few year(s). In preparation for these future investigations, several cases were observed where local tax authorities asked questions related to capital increases. This is a centrally managed action.