As a response to the GIMLE judgement of the European Court of Justice (ECJ judgment C-322/12, 3 October, 2013 [GIMLE ]), the Belgian Accounting Standards Commission (ASC) announced the withdrawal of its opinion no. 126/17.
The opinion concerned the valuation of acquired assets, whether for free or below market value. Following publication of the opinion back in 2001, many criticised the abandonment of asset valuation at historical value (acquisition value) in favour of valuation against real value.
With its judgement, the ECJ formally confirmed that the principle of a ‘true and fair view’, does not allow for the replacement of a valuation of assets at historical value in favour of valuation on the basis of real value (even in cases of large discrepancies), taking into account the provisions of the fourth accounting directive.
This judgment is very interesting from both a GAAP and tax perspective as the Belgian tax authorities often cite the underestimation of assets when a Belgian taxpayer records assets at acquisition value which is clearly below real value, and can claim Belgian tax incentives/reduce the corporate income tax burden by means of an accounting treatment based on the acquisition value.
By invoking the concept of underestimation of assets, the Belgian tax authorities can still tax the difference between the real value and the acquisition value. Based on a general interpretation, the application of an underestimation of assets assumes of course an infraction of Belgian accounting law.