Belgian reporting obligation for payments to tax havens

Philippe Vanclooster 4 November 2014


Belgian requirements for payments to ‘tax havens’

As from 1 January 2010, companies subject to Belgian corporate income tax or Belgian non-resident corporate income tax are obliged to declare direct or indirect payments exceeding EUR 100,000 to recipients established in so-called ‘tax havens’. The reporting obligation applies to both cash payments and payments in kind. Payments that are not reported in the tax return are not deductible. Reported payments are only deductible if the taxpayer can prove that the payment was made for an “actual and genuine” transaction and was not aimed at artificially avoiding tax.

OECD blacklist

For purposes of the above mentioned reporting obligation, a tax haven country is, apart from a standard list of countries compiled by the Belgian government, also defined as a state that, for the whole taxable period during which the payment was made, is considered by the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes (“the Global Forum”) as a state that has not substantially or effectively applied the OECD exchange of information standard (“OECD blacklist”).

On 22 November 2013, the OECD Global Forum published an updated black list with countries who failed to meet the OECD Exchange of Information standard. Four new countries (i.e. Luxembourg, Cyprus, the British Virgin Islands and the Seychelles) were deemed to be non-compliant.

Recently, on 29 October 2014, a new meeting of the OECD Global Forum took place. ‘The statement of outcomes’ adopted seven new peer review reports. However, no update of the blacklist was published by the Global Forum. It is not expected that another meeting of the OECD Global Forum will take place in 2014. It is thus unlikely that the four new countries will be removed from the blacklist in 2014.

Conclusion

If the four new countries remain on the OECD blacklist for the whole financial year 2014, the above mentioned reporting obligation applies for payments made by Belgian companies to a.o. Luxembourg or Cyprus. It should be reviewed how this Belgian rule links in with the tax treaties concluded with those countries as well as with the European Freedoms.