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Tax Facts From Belgium
Reporting obligations of payments to tax-havens
At the end of 2010, Belgium introduced a new transparency obligation for Belgian companies and permanent establishments to report in their annual tax return all payments exceeding 100,000 EUR on a yearly base made to tax havens (art. 307, ?1, al.3 ITC 92). Since the legal provision was not made entirely clear, the tax administration recently published a Circular Letter on this matter.
The reporting obligation applies to all payments directly or indirectly made by Belgian companies or establishments to companies, legal entities or individuals located in "tax havens". A tax haven is considered as any country that is mentioned on the OECD list of countries that do not apply the OECD standards of exchange of information, or on the Belgian list of countries that levy a corporate tax of less than 10%.
Taxand Belgium looks at the key messages of the Circular Letter. The localisation in a tax haven does not only relate to recipients that have an address in a tax haven, but also to payments made to a financial account held in a tax haven. As it is not always possible for a taxpayer to know when a payment is made to a tax haven, the Circular Letter confirms this fact by stating that the obligation only applies to taxpayers that "know or reasonably should know" that such payment was made.
Although the Circular Letter does provide some clarity, it often deviates from the initial intention which was to gain an insight into more "questionable" payments made by Belgian companies. The interpretation by the tax administration risks imposing a heavy administrative burden on all taxpayers, including those who act in good faith.
VAT on Land as from 1 January 2011
With the exception of certain transactions of "new" buildings, the supplies of immovable property in Belgium are exempt from VAT and are subject to the proportional registration duties. The transfer of a "new" building is subject to VAT when:
i) the building qualifies as "new", this is until the 31 December of the second year following the year in which the first occupation or the first use of the building took place
ii) the supplier is a real estate professional salesmen (they are obliged to assess VAT on the sales of new buildings) or
another person who has opted for the application of VAT.
Taxand Belgium highlights the new rules of VAT on Land. When selling a building with VAT, the accompanying land sold together by the same person, will also be subject to VAT. Consequently, either VAT will be applied to both the building and the accompanying land, or both will be exempt from VAT (and subject to proportional registration duties). These new rules will apply as well to professional constructors as to suppliers who opted for the application of VAT.
- Taxand's Take
The Belgian tax authorities will in the near future give more details about the definitions and terms in the law and their interpretation. When this information is available, further analysis will be provided.
Your Taxand contact for further queries is:
Geert De Neef
T. + 32 2 787 91 11
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