Belgium to reduce assessment periods and fight tax litigation backlog with unprecedented measures
Written By
Partner
Belgium
I am a leading lawyer in tax litigation and tax controversy in Belgium and a teaching professor (tax litigation) at two Belgian universities. I also have complementary experience in other areas of tax law such as restructurings, tax planning for companies, due diligences, advance tax rulings, local taxes, stock option plans, international employment.
In line with the new tax measures announced by the freshly formed government, several number of tax procedural measures are worth noting.
Reduced investigation and adjustment deadlines
Unusually, the investigation and taxation deadlines available to the tax authorities will be reduced. The most prominent change relates to the situations where the taxpayer has committed an infringement to the tax law with fraudulent intent - the assessment period will be reduced from 10 to 7 years (all deadlines start as from the 1st day of the assessment years, usually the year following the year during which the taxable income was received).
The extraordinary deadlines implemented by the previous government, in case the taxpayer had to file the so called semi-complex (mainly companies working at international level) or complex tax returns (taxpayers using aggressive tax methods, e.g. hybrid instruments, trusts or foundations) have also been reduced (from 6 or 10 years to 4 years). It remains to be seen when those changes will come into effect.
Click here to see a chart comparing the existing and future deadlines.
Reduction of the backlog of tax litigation in court : tax arbitration in the coming
With an impressive number of cases is pending with Belgian courts specialised in tax, the government intends to introduce two fundamental solutions.
The first one is the creation of a(n) optional tax arbitration system. When the tax administration issued its last word on a tax litigation, namely its decision on a tax protest, the taxpayer, instead of filing a legal action, could ask the case to be tried by a panel of arbitrators. The case will be prepared by a first “arbitrator”, but the final decision will be made by one or more other arbitrators. The arbitrators - who will probably be civil servants from the tax authorities, will be guaranteed independence from the government. The costs of the dispute will be determined on a lump-sum base and will be borne by the losing party.
Reduction of the backlog of tax litigation in court : transfer of tax case from one court to another
The workload of tax courts is uneven. The Brussels Court of Appeal, tax division, has a very large backlog. The new government would like to provide for the possibility of transferring cases to a jurisdiction with a smaller backlog in order to speed up the procedure. It will then be necessary to provide for derogations from the current rules on territorial jurisdiction.
