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taxation.be

Friday
Mar 22nd
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The Regionalization of Income Tax

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Written by Marc Quaghebeur Wednesday, 15 December 2010

The elections are already five months behind us and yet there is no sign of a new government before year end. Before a new government can be formed, the winners of the elections – the Flemish nationalist N-VA and the socialist PS in Wallonia – must agree on a solution to the financial/budgetary problems, realize institutional reform and strengthen the socio-economic environment.

If – or when – a decision is reached on state reform, chances are that either personal or corporate income tax will be transferred to the regions. The latter is a sensitive issue, but would be of significant interest to AmCham Belgium members. The Legal and Taxation Committee was briefed on this issue by one of the specialists in the field, Professor Sylvain Plasschaert.

According to Professor Plasschaert, transferring corporate income tax to the regions has been on the Flemish agenda for over a decade. One of the ideas behind it is to give the regions the responsibility for collecting the revenue they are spending, as opposed to relying on grants or ‘donations’ from the federal government. It would also give the regions the means to develop their own economic policies and allow incentives to shift from subsidies towards tax reductions. On the other hand, politicians in the Walloon Region fear this will lead to fierce competition between the regions, with Brussels charming multinational headquarters with drastically reduced tax rates (read the article on AmCham Connect).

Guidance Clarifies Tax Treatment of DredgeWorkers

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Written by Marc Quaghebeur Monday, 15 November 2010

The Belgian tax authorities on October 26 published a practice note (Ci.R9. Div. 607/317) clarifying the tax regime for employees working aboard dredgers.
The tax authorities note that in principle, dredging projects fall under articles 5 and 7 of Belgium’s tax treaties. This means their profits are taxable in the country where the enterprise is set up unless it has a permanent establishment in the country where it works. Only Belgium’s double tax agreements with Hong Kong and Macao1 list dredging projects as examples of projects that constitute a permanent establishment. (read the full article).

Belgian Supreme Court Clarifies Tax Year for Nonresidents

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Written by Marc Quaghebeur Sunday, 03 October 2010

In a May 20 decision, the Belgian Supreme Court clarified the grounds of taxation for nonresidents.

In Belgian tax law, residence starts when the taxpayer takes up residence and ends when he leaves Belgium to take up residence elsewhere. The tax year starts on the day the taxpayer takes up residence. If he takes up residence in September 2010, he must file a tax return in 2011 for the year 2010, but only for the period September to December 2010. The tax return is to be filed by June 30, 2011. For tax year 2010 (for income earned between September and December), the year of assessment is 2011 (read the full article).

Belgium Publishes List of Tax Havens

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Written by Marc Quaghebeur Wednesday, 02 June 2010

Belgium on May 12 published a royal decree listing the jurisdictions recognized as tax havens in conjunction with the new reporting requirement that entered into force on January 1.
All Belgian companies and permanent establishments of foreign companies must report in their income tax returns all (direct and indirect) payments in excess of €100,000 made to tax havens from January 1, 2010.  Payments that are not reported are disallowed, and payments that are reported are only allowed as expenses if the taxpayer can justify that the payment was made in the context of an ‘‘actual and genuine transaction’’ with ‘‘persons other than artificial tax avoidance schemes.’’
Belgium defines tax havens as any countries that during the whole tax period during which the relevant payment has been made, have either been qualified by the OECD Global Forum on Transparency and Exchange of Information as countries not having substantially and effectively implemented the OECD exchange of information standard or are listed in a royal decree (read the full article).

Belgiumís De Facto Position on the Taxation of Trusts

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Written by Marc Quaghebeur Sunday, 30 May 2010

The Belgian Ruling Committee (the authority for advance rulings) issued three rulings in late 2009 relating to the tax treatment of payments made by a trust to a beneficiary during the life of the settlor. Those rulings, which have just been published on the committee’s website, offer insights into the position of tax authorities in a country that does not have a trust concept.

As a typical civil-law country, Belgium does not have the concept of a trust. Moreover, Belgium has not signed the Hague Convention of July 1, 1985, on the Law Applicable to Trusts and on Their Recognition.  The Private International Law Code adopted in 2004 dealt with the concept for the first time. (read the full article).

Belgium and US Clarify Pension Plans Under Double Tax Treaty

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Written by Marc Quaghebeur Wednesday, 12 May 2010

When Belgium and the US signed a new double tax treaty in 2006, one of the major innovations was a provision holding that when an employee comes to work in Belgium, he and his employer can continue to pay into his US pension plan for a maximum of ten years. His employer’s contributions are not taxable income and the employee’s personal contributions are tax-deductible.
In an Agreement dated January 14, 2010, the Competent Authorities of both States listed the pension plans that qualify for tax relief.
(read the article on AmCham Connect).

Belgium Relaxes Its Bank Secrecy Rules

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Written by Marc Quaghebeur Sunday, 09 May 2010

Until recently, Belgium was one of the few countries that did not participate in the international exchange of bank account data. The Belgian tax authorities took the position that the domestic provisions governing bank secrecy (article 318 of the Income Tax Code (1992)) prevented them from investigating the bank details of non-Belgian nonresidents at the request of another tax administration.

Belgium does not have bank secrecy rules like Austria or Luxembourg; bankers do not face criminal prosecution if they break the rules. Rather, banks have an obligation to be discreet regarding the tax authorities: They cannot answer requests from the tax authorities about their clients’ bank accounts. However, the scope of that bank secrecy is limited. Banks cannot refuse to help the tax authorities if they request information in an investigation regarding the VAT or the inheritance tax. However, such investigations are rare (read the full article).

We may not have a government, but we have tax mediation In 2007, Belgium introduced a tax medi

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Written by Marc Quaghebeur Sunday, 10 January 2010

When you do not agree with the taxman, your only recourse is to go to court. However, you cannot go directly to court. Instead, you must first file an administrative appeal (reclamation/bezwaar) with the regional director of taxes. And do not wait too long – you must do that within six months from the day you receive your tax assessment. It is only if the director denies your appeal or does not make a decision within another six months that you can take matters in your own hands and go to court.

In an effort to limit the number of court cases, the Minister set up the Tax Mediation Department. Finally, after three years, it is now up and running. (read the artlcle in AmCham Connect).

Government Approves Decrees on Budget Tax Measures

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Written by Marc Quaghebeur Saturday, 05 December 2009

The Belgian government on November 15 adopted four royal decrees that implement some of the budgetary measures announced in Parliament by Prime Minister Herman Van Rompuy a month ago. Most of the measures must be implemented by law, but for some, the royal decrees are sufficient. (read the full article)

Belgium Prepares For Automatic Information Exchange

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Written by Marc Quaghebeur Saturday, 21 November 2009

Belgium has adapted its legislation so that it can switch to the automatic exchange of information system under the EU savings directive as of 2010.

Under the EU savings directive,1 which entered into force on July 1, 2005, most EU member states are required to exchange information on the interest income earned by residents of other member states. However, Austria, Belgium, and Luxembourg negotiated a special option allowing them to withhold tax during a transitional period on the interest income earned by the residents of the other member states. This withholding tax is currently 20 percent and will go up to 35 percent in 2011. When the Austrian, Belgian, and Luxembourg tax administrations collect the tax, they must remit 75 percent of the amount to the home states of the individual saver. (read the full article)         

Government Proposes New Individual and Company Tax Measures

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Written by Marc Quaghebeur Thursday, 29 October 2009

The Belgian government recently submitted to the Chamber of Deputies bill nr 52/2170 that proposes a long list of tax measures, most of which involve improvements to the text of the law or the confirmation of a position taken by the tax authorities. In some cases, the bill proposes amendments to tax legislation

to bring it into compliance with the decisions of the Constitutional Court and the European Court of Justice. The most important tax measures, most of which would apply beginning in 2010, are described in this article.

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