The Belgian tax authorities announced a new wave of tax audits with respect to the application of the Belgian wage withholding tax incentives (more in particular the incentives with respect to research and development, night and shift labour, overtime, etc.).
Experience based on previous audits
A few years ago, a similar wave of audits took place. During that first wave of tax audits, we experienced that:
- the information to be provided according to the request for information was extensive and exceeded what has been provided by law in this respect;
- the legislation was interpreted more strictly by the tax authorities;
- in certain cases, the tax authorities took incorrect and aggressive positions during the tax audits.
Once an audit is announced, the company has 1 month to provide the requested information. Therefore, it is of the utmost importance to be well prepared for the audit in order to substantiate the exemption claimed and to provide the information that is legally required. Although the investigation period is (only) 3 years, the assessment period is 5 years. In the case of an incorrect application of the exemption, the exposure can be substantial.
During the first wave of tax audits, the interpretation of most of the Belgian tax inspectors with respect to a qualifying night and shift regime and qualifying R&D activities was very/too strict. Therefore, PwC raised several questions towards the central tax authorities in order to have a clear opinion on the qualifying activities. As a result, the Belgian tax authorities will shortly publish a FAQ to give more guidance on the correct application of the incentives.
Should you receive a request for information with respect to the application of the wage withholding tax incentives, do not hesitate to contact your PwC team.
PwC has an experienced team to assist you from strategy through execution. The support the PwC team can provide you includes:
- determining what information the company should provide to the Belgian tax authorities (upfront strategy);
- determining how the company can gather and deliver the information efficiently;
- analysing whether the position taken by the Belgian tax authorities is correct;
- assisting the company in both the administration (i.e. pre-court) phase and the legal (i.e. court) phase.
For more information on this topic, please don’t hesitate to contact Kim Meerschman.