BELGIUM Law and Practice Contributed by: Robin Minjauw and Anouk Van der Mast, Tiberghien
gard legal acts that are primarily tax-driven and con - trary to the purpose of the law, unless the taxpayer demonstrates valid non-tax reasons. Belgium also relies on certain SAARs, such as trans - fer pricing rules (based on the arm’s length principle), Controlled Foreign Company (CFC) rules, Cayman tax rules (CFC rules for individuals), hybrid mismatch rules, interest limitation rules, and a specific anti-avoidance rule relating to the dividend received deduction. Belgium also combats tax evasion and aggressive avoidance through the exchange of information with other jurisdictions (see 8. Mutual Agreement Proce- dures and Arbitration ). 5.3 Blacklists and Non-Cooperative Jurisdictions Belgium applies both the EU list of non-cooperative jurisdictions for tax purposes (the “EU blacklist”), the OECD list, and a domestic tax haven list. Transac - tions with entities in listed jurisdictions are subject to reporting obligations, stricter deductibility conditions, the application of CFC rules (and Cayman tax rules), denial of tax benefits, and enhanced scrutiny by tax authorities. The overall objective is to discourage prof - it shifting and artificial arrangements involving low-tax or non-cooperative jurisdictions. 5.4 Reporting Obligations and Disclosure Regimes Belgium has implemented an extensive set of report - ing obligations. Key measures include DAC6 manda - tory disclosure rules requiring intermediaries and tax - payers to report certain cross-border arrangements, as well as Country-by-Country Reporting and transfer pricing documentation for multinational groups. Finan - cial institutions must report foreign account informa - tion under the Common Reporting Standards (CRS) and the Foreign Account Tax Compliance Act (FATCA), enabling the automatic exchange of data with other jurisdictions. Belgian entities must also register their ultimate beneficial owners (UBO) in the UBO regis - ter to enhance ownership transparency. In addition, companies must report payments to tax havens that exceed statutory thresholds, while AML legislation imposes obligations to report suspicious transactions. Together, these transparency mechanisms strengthen
the detection of offshore income, artificial structures and profit-shifting arrangements. 5.5 Role of Tax Authorities and Enforcement Measures Belgian tax authorities have broad investigative pow - ers, including access to accounting and banking information, third-party data requests, on-site audits, unannounced business visits, and – subject to judicial authorisation – tax searches or raids (fiscal perquisi - tions). These tools are complemented by extended assessment periods and criminal prosecution mecha - nisms in cases of fraud. 6. Penalties and Sanctions 6.1 Tax Penalties Legal Framework Belgium applies a dual sanctioning system consisting of the following. • Administrative tax penalties governed by the fed - eral tax legislation (eg, ITC 92 and the VAT Code), and regional tax codes (eg, Vlaamse Codex Fis- caliteit – VCF). These penalties include tax increas - es, fixed administrative fines and specific sanctions relating to international obligations (eg, transfer pricing documentation or DAC6 reporting). • Criminal tax penalties governed by the fiscal criminal provisions in the ITC 92 and the VAT Code when there is fraudulent intent. These frameworks operate subject to core principles such as the legality principle, the motivation require - ment, fundamental rights protections (eg, right to a fair trial) and the non bis in idem rule. Competent Authorities Competent authorities include: • the Federal Public Service Finance ( FOD Financiën ) for administrative sanctions. • regional tax administrations for regional taxes; • the Public Prosecutor for criminal prosecutions; and • correctional courts for the imposition of criminal penalties
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