On 2 May 2019, Belgium completed the implementation process of the Directive on tax dispute resolution mechanisms in the EU (Council Directive 2017/1852 of 10 October 2017). This enhanced procedure for resolving cross-border direct tax disputes puts taxpayer rights at the forefront, has a broader scope of application as well as an obligation for the competent authorities of the EU Member States to take conclusive and enforceable decisions that effectively resolve taxation not in accordance with a relevant double tax treaty.
This means that companies and individuals can make a complaint under the new procedure as from 1 July 2019 for (cross-border) tax disputes concerning income or capital related to a taxable period commencing on or after 1 January 2018.
The Belgian Implementing Act has remained largely faithful to the structure and terms of the Directive. A dispute will have to be referred to the competent authorities of the Member States concerned by means of a formal complaint (art. 3), unless the matter concerns small enterprises or individuals. Once the complaint has been accepted and the taxpayer has provided the required information, the competent authorities of the tax administrations concerned will try to resolve the question in dispute by mutual agreement (art. 4). In this respect, both an obligation to produce a result and a timeline have now been set down. If deemed appropriate, an Advisory Commission (art. 6) and an Alternative Dispute Resolution Commission can be set up (art. 10) if the tax administrations cannot reach an agreement (in a timely manner). If a complaint is rejected, the taxpayer can challenge that decision.
The Belgian Implementing Act contains a number of provisions requiring special attention and a few that are more specific compared to the Directive. For instance, the Belgian legislator prescribes strict time limits within which the taxpayer has to provide information to facilitate proceedings and the time limits within which the tax administration has to act vis-à-vis the taxpayer or the foreign authorities concerned.
Parties should also be aware that, under this procedure, there is an obligation to publish the final decision (if not in its entirety, then as an abstract).
Taxpayers who wish to rely on this procedure can do so while simultaneously applying administrative, judicial or other international procedures but will need to choose for one these procedures at some point. Practice in the next few years will tell if this enhanced procedure lives up to the promise and will effectively lead to a more effective resolution of cross-border tax disputes.
For more insights and a discussion on how this may affect your business, please contact Bram Markey.