New procedural tax rules as from 2023!
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A law adopted on the 20th of November 2022 contains major changes to the Belgian tax procedure. The law notably provides the extension of tax investigation, assessment and retention periods. It also changes the approach of the duty to collaborate with the Belgian Tax Authorities (“BTA”).
Changes apply to both direct taxes and VAT and will enter into force as from tax year 2023 and for VAT as from 1st of January 2023.
Changes apply to both direct taxes and VAT and will enter into force as from tax year 2023 and for VAT as from 1st of January 2023.
I. Direct taxes
A. Investigation and assessment periods
The BTA may only investigate and assess taxes due by taxpayers within certain periods.
The standard investigation and the standard assessment periods are currently 3 years. These periods can be extended in particular situations such as circumstances implying a (suspicion of) tax fraud (extended to 7 years).
While not completely changing the approach, new rules do bring some important changes.
1. Absence of tax fraud:
The investigation and the assessment periods will change as follows:
• for tax returns that are not (timely) filed, standard investigation and assessment periods will both be extended to 4 years;
• for the following specific international cases, the investigation and the assessment periods will be extended to 6 years:
- Taxpayers having to file a Local File (form 275 LF) or a Country-by-Country report (form 275 CbC);
- Taxpayers having to declare payments to “tax havens” (form 275 F);
- Taxpayers applying for an exemption, a waiver or a reduction of withholding taxes based on a Double Tax Treaty or an EU directive;
- Taxpayers claiming Foreign Tax Credits;
- Taxpayers for whom reportable information (relating to their tax return) has been obtained by the BTA from foreign authorities under DAC6 or DAC7 reporting requirements (provided that the amount concerned for a taxpayer exceeds €25,000).
• for “complex tax returns”, the investigation and the assessment periods will be extended to 10 years, i.e. this concerns tax returns where the following has to be reported:
- hybrid mismatch arrangements;
- application of Controlled Foreign Country (“CFC”) rules; or
- legal constructions.
Above extensions do not apply to following “ordinary” disallowed expenses:
• regional taxes, charges or retributions;
• fines, penalties or confiscations of any kind;
• non-deductible car expenses;
• non-deductible reception and business gift expenses;
• non-deductible restaurant expenses;
• non-specific business clothing expenses; or
• social benefits (including luncheon vouchers, sports/cultural vouchers, and eco-vouchers).
2. Tax fraud:
In case of suspicion of tax fraud, the investigation and the assessment periods are extended from 7 to 10 years.
Regarding the investigation period, the BTA will no longer have to notify indications of fraud to apply this extended period, a mere notification of its intention to apply this extended period on the basis of a suspicion of fraud will suffice (i.e. the indications of the suspicion will not be notified anymore to the taxpayers).
The BTA is further required to specify the number of years under investigation for suspicion of fraud.
B. Tax claims
To compensate the negative effects of investigation and assessment periods extensions, taxpayers will have 1 year (instead of 6 months) to file a tax claim.
II. VAT
A new assessment period of 4 years is foreseen in case a VAT return has not been (timely) filed. It is unclear whether this extended period only relates to the VAT that could be due, with respect to the period to which the non-(timely) filed VAT return relates, or if it relates to the VAT of the entire year.
As with direct taxes, the assessment period in case of (alleged) VAT fraud is also extended from 7 to 10 years.
The rate of late payment interests (interests in favor of the BTA) is also adapted. This rate will be equal to the revised yearly interest rate increased with 4 points. Moratorium interest rates (interest in favour of taxpayers) will be 2 points lower than late payment interest rates.
III. Direct taxes and VAT
Given the new investigation and assessment periods, the retention period for accounting and tax records will be extended, from 7 to 10 years.
Eventually, taxpayers or third parties obstructing a tax investigation (e.g. non-compliance with provisions relating to on-site audits or request for information) may be sentenced by a judge to pay penalty payments.
In case of questions, please do not hesitate to reach out to your regular contact within the Fieldfisher Belgium tax team.
• regional taxes, charges or retributions;
• fines, penalties or confiscations of any kind;
• non-deductible car expenses;
• non-deductible reception and business gift expenses;
• non-deductible restaurant expenses;
• non-specific business clothing expenses; or
• social benefits (including luncheon vouchers, sports/cultural vouchers, and eco-vouchers).
2. Tax fraud:
In case of suspicion of tax fraud, the investigation and the assessment periods are extended from 7 to 10 years.
Regarding the investigation period, the BTA will no longer have to notify indications of fraud to apply this extended period, a mere notification of its intention to apply this extended period on the basis of a suspicion of fraud will suffice (i.e. the indications of the suspicion will not be notified anymore to the taxpayers).
The BTA is further required to specify the number of years under investigation for suspicion of fraud.
B. Tax claims
To compensate the negative effects of investigation and assessment periods extensions, taxpayers will have 1 year (instead of 6 months) to file a tax claim.
II. VAT
A new assessment period of 4 years is foreseen in case a VAT return has not been (timely) filed. It is unclear whether this extended period only relates to the VAT that could be due, with respect to the period to which the non-(timely) filed VAT return relates, or if it relates to the VAT of the entire year.
As with direct taxes, the assessment period in case of (alleged) VAT fraud is also extended from 7 to 10 years.
The rate of late payment interests (interests in favor of the BTA) is also adapted. This rate will be equal to the revised yearly interest rate increased with 4 points. Moratorium interest rates (interest in favour of taxpayers) will be 2 points lower than late payment interest rates.
III. Direct taxes and VAT
Given the new investigation and assessment periods, the retention period for accounting and tax records will be extended, from 7 to 10 years.
Eventually, taxpayers or third parties obstructing a tax investigation (e.g. non-compliance with provisions relating to on-site audits or request for information) may be sentenced by a judge to pay penalty payments.
In case of questions, please do not hesitate to reach out to your regular contact within the Fieldfisher Belgium tax team.