Budget 2012

Other tax measures

Last update: 25 April 2013 - 10:10 CET

Corporate tax measures | Individual tax measures | Indirect tax measures

Measures to combat tax and social fraud 

Maatregelen om fiscale en sociale fraude te bestrijden | Les mesures visant à combattre la fraude fiscale et sociale

General anti-abuse rule

The general anti-abuse rule - GAAR - (Art. 344 §1 Income Tax Code, Art. 106, 2nd indent Inheritance Tax Code; Art. 18, §2 Registration Tax Code) has been rewritten by the Program Law of 29 March 2012 (Dutch | French). The main purpose behind this modification is that the tax authorities should no longer be required to demonstrate that their re-characterisation of the legal act(s) executed by the taxpayer achieves identical or at least similar legal consequences as the legal act(s) executed by the taxpayer.

The revised anti-abuse provision consists of 4 components: 

1. What is not opposable towards the tax authorities? 

It is no longer the legal qualification that is not opposable; the revised anti-abuse provision states that it is the legal act (or a set of legal acts realising a single transaction) that is not opposable towards the tax authorities; 

2. What is the burden of proof for the tax authorities? 

The authorities must demonstrate tax abuse, by presumptions or other means of proof as meant in Article 340 Income Tax Code / Article 185 Registration Taxes Code; this proof must be based on objective circumstances. Tax abuse exists when the taxpayer realises, through a legal act or a set of legal acts, one of the following transactions: (i) a transaction whereby, contrary to the law’s objectives, he/she places him or herself outside the scope of the Code or an executing decree’s application, or (ii) a transaction whereby he/she claims a tax benefit provided by the Code or an executing decree, the granting of which would be contrary to the law’s objectives and the essential goal of the transaction is to obtain this benefit. Tax abuse therefore requires the presence of both an objective and a subjective element: the objective element implies the choice of a legal form allowing a tax payer to violate the objectives of a tax law, whereas the subjective element is the choice for this legal form based on the essential aim of achieving a tax benefit; 

3. What is the burden of proof for the taxpayer? 

The taxpayer can avoid the GAAR application if he/she demonstrates that the choice for his/her act(s) is justified by motives other than tax avoidance. The explanatory memorandum clarifies that this test implies proof that the taxpayer's choice is "essentially" motivated by non-tax reasons, i.e. the authorities can not only challenge transactions with exclusively tax based motives but also transactions where the non-tax related motive(s) are so general that they are present in every transaction of the same type or are so immaterial compared to the tax motive that they cannot be accepted, since the taxpayer would not have accomplished the act without the tax benefit; 

4. What is the consequence of the provision’s application? 

If the taxpayer fails to demonstrate one or more sufficient non-tax based motives, the tax authorities can "restore" the taxable base and tax computation in such a way that taxation in accordance with the legislator’s objectives is possible, as if the abuse had not taken place. It is no longer explicitly stated that the effects and consequences of this redefined fact pattern can differ from those following on from the acts accomplished by the taxpayer. 

For income tax purposes, the new anti-abuse provision applies as of tax year 2013, as well as to any legal acts (or set of legal acts) accomplished during tax year 2012, provided the taxable period ends on or after the Program Law’s date of publication - 6 April 2012 - an anti-avoidance provision has been added allowing the authorities to disregard any change to the annual accounts’ closing date as of 28 November 2011. 

For registration and inheritance taxes, the new provision applies to acts (or a set of legal acts) accomplished as of the first day of the second month following the month in which the law is published, i.e. 1 June 2012.

The administrative circular of 4 May 2012 (Dutch | French) on the new anti-abuse provision provides very little additional guidance on its scope of application. An additional circular of 19 July 2012 (Dutch | French) lists some practical examples of cases where transactions are/are not caught by the new GAAR for registration and inheritance tax purposes.

Source: Program Law of 29 March 2012, articles 167-169 (Dutch | French)

Turbo usufruct structures and other anti-fraud measures

The anti-tax fraud measures also include, among others, a better audit of “turbo usufruct” structures (or even an increase of the value of the related benefit in kind), a better perception of road fines, the limitation of the amount of cash transactions, a harmonisation of the legal provisions on investigation and procedure, so that the most strict rules apply to all taxes and extended notification obligations for notaries (in particular for inheritance tax purposes). 

The budget agreement also contains several measures to strengthen the fight against social fraud, such as: 

  • A better collaboration between tax and social authorities; 
  • Measures against social contributions fraud (e.g. false self-employed; registration of Horeca employees through a cash register; fight against fictitious enterprises and abuse of companies; clarification of the concept of “salary”, for instance by limiting the amount of representation allowances; etc.); 
  • Measures against fraud in the area of social benefits ; and 
  • Measures against cross-border fraud.

In the meantime, State Secretary John Crombez publised his anti-fraud action plan for 2012 and 2013 (Dutch | French). The main anti-fraud measures in Crombez' plan relate to the "Una Via" legislation (either administrative or criminal procedure) and an enhanced cooperation between the Ruling Commission and the central tax authorities to discourage the filing of "test cases". In the social part of the ant-fraud action plan, the introduction of a GAAR for social purposes is announced, as well as a revision of the concept of "representation allowances" ("kosten eigen aan de werkgever"/"frais propres à l'employeur).

Partial regionalisation of personal income tax 

Gedeeltelijke regionalisering van de personenbelasting | Régionalisation partielle de l’impôt des personnes physiques

The regionalisation of the personal income tax is part of a large Belgian state reform. The fiscal autonomy for the regions would be increased to €10.7 billion for 2012. This measure should allow the different regions to take appropriate tax measures to better meet regional needs, whilst preserving amongst others solidarity between the regions and ensuring financial stability. Next to the fiscal responsibility mechanism, there will also be a responsibility mechanism regarding pensions and climate. Special finance allocation is provided for the Brussels region due to its specific characteristics.

Based on the political agreement reached on 1 December 2011 (Dutch | French), the regions will be entitled to apply surcharges (“regionale opcentiemen / additionnels régionaux”) on the federal income tax. 

To avoid a substantial increase of the personal income tax liability, the regional surcharge will need to be counterbalanced by a decrease of the federal income tax rates. 

In fact, the regions will have the ability to apply different surcharges per taxable bracket. As a matter of principle, the progressiveness should however remain intact. The regions will nevertheless be entitled to slightly deviate from this principle: 

  • For a maximum amount of €1,000 per taxpayer (indexed amount) and; 
  • As far as the regional surcharge on a tax bracket is not lower than 90% of the highest regional surcharge of the lower tax brackets. 

For instance, if the surcharge on the second bracket would be 30%, then the surcharge for the third bracket can be reduced to maximum 27% and only to the extent that the benefit for the taxpayer does not exceed €1,000.

As far as income subject to a separate tax rate is concerned, the regions will be entitled to apply a unique and linear surcharge (no differentiation allowed on the tax brackets). Certain categories of income subject to a separate tax rate remain the exclusive domain of the federal state. This is for instance the case for dividends, interest, and capital gains on investment income. On such income the regions will not be allowed to apply surcharges. 

Certain tax expenditures will become the exclusive competence of the regions. They include measures to stimulate the purchase of an own dwelling, the installation of anti-theft and anti-fire systems, the maintenance and renovation of protected monuments, expenditures related to service vouchers and energy savings, etc. These items come on top of the expenditures for which the regions are already fully competent (e.g. measures to stimulate energy saving investments and the purchase of “clean” cars). For all these items, the regions will be entitled to grant tax reductions or credits, but no tax deductions.

In exercising their fiscal autonomy, the regions will have to: 

  • refrain from engaging in disloyal tax competition; 
  • avoid double taxation; 
  • take into account the EU free movement of persons, goods, services and capital. 

The federal state will remain fully competent for the determination of the taxable base, the payroll tax and the (progressive) tax rates. 

This is also the case for the taxation of non-residents. The federal government will, however, apply the different regional rules so as not to cause any infringement with EU law.

Repair measures 

The draft law containing tax and financial measures, in addition to implementing the remaining 2012 budget measures agreed upon last year, also contains some “repair legislation”. The main repair measures are briefly mentioned below:

Individual tax
  • Execution of the ECJ decision in Case C-370/11 (Commission v Belgium): currently, the gain realized on the redemption of shares by, or the liquidation of, UCIT’s investing more than 40% in receivables is taxable as interest, unless the UCIT has no European passport and is established in the EU; the exception is now extended to UCIT(s without European passport established in the EEA and has no European passport; furthermore, a few other changes are made: also the gain on the transfer for consideration of shares of UCIT’s is caught; if the percentage of the investment in receivables is not known, it is henceforth deemed to be 100%; the grandfathering clause of the Savings Directive is abolished and the taxable base in case there is no acquisition or investment value is defined (transactions as of the date of publication of the law) - Art. 19bis ITC; 
  • Execution of a 2008 decision of the Constitutional Court: the existing exception to the rule that the investment deduction cannot be claimed in case of transfer of the right of use, is broadened to also include transfers to an individual or a company who themselves satisfy the conditions for this deduction, use the assets in Belgium to obtain profits and do not transfer the right of use to a third party (tax year 2013, only for assets acquired or constituted as of 1 January 2012) – Art. 75, 3° ITC; 
  • Confirmation of the administrative practice regarding the taxation of foreign alimony payments (as of tax year 2013) – Art. 90, 3° ITC; 
  • Taxation as miscellaneous income, at the separate rate of 15%, of income from the concession of immovable assets for the installation by mobile phone operators of transmission and reception equipment (as of 1 January 2012) – Art. 90, 5° ITC 
  • Resolution of some problems with the application of the rules allocating the tax-exempt amounts among spouses (as of tax year 2013) – Art. 134 ITC; 
  • Absence of communal surcharges on all private interest and dividend income (as of tax year 2013) - Art. 466, 2nd indent ITC; 
Non-resident tax
  • Clarification that remuneration is deemed borne by a Belgian establishment regardless of whether it is borne directly (e.g. paid as remuneration in Belgium) or indirectly (e.g. paid abroad by a related entity and charged back as service fee to the Belgian establishment) – Art. 228, §2, 6° ITC; 
  • Introduction of 2 new categories of taxable income that is borne by a Belgian resident or a Belgian establishment of a non-resident: (i) income for which Belgium has tax jurisdiction under a tax treaty and which is taxable if received by a resident and (ii) if no tax treaty applies, income for which the non-resident does not demonstrate that it has been effectively taxed in the country of residence (as of 1 January 2012) - Art. 228, §3 ITC. Based on the Royal Decree of 4 March 2013 (Dutch | French) this type of income will be subject to professional withholding tax at a rate of 33%. Taking into account that a 50% lump sum expense deduction can be applied, the effective tax rate will be 16.5%. This 16.5% rate may be further reduced to the extent that the professional withholding tax would exceed the maximum withholding tax rate which, for tax purposes, is allowed under the double taxation treaty concluded between Belgium and the state in which the beneficiary is resident. The Belgian debtors of the income must withhold this withholding tax for income paid or attributed from 1 March 2013.
  • A foreign company has a Belgian establishment if, for the same or related projects, it carries out services in Belgium through one or more individuals for in total more than 30 days during any 12-month period (as of 1 January 2012) – Art. 229, §2/1 ITC; 
  • Introduction of an anti-abuse rule for the calculation of the 30-day period for building and construction activities to counter the use of various related companies to avoid exceeding the threshold (as of 1 January 2012) - Art. 229, §2/2 ITC; 
  • Alimony payments will also be deductible when the recipient is a non-resident (as of tax year 2013) – Art. 242, §1 ITC; 
  • Tax deductions and reductions: confirmation of the administrative interpretation that the 75%-rule must be assessed against the professional income of the taxable period (as of tax year 2013) – Art. 242, §1, 2° ITC.

At the occasion of the budget control 2013 a proposal has been made to limit the scope of the new Art. 228, § 3 ITC. More information in this respect can be found on our Belgium budget 2013 website.