The Belgian Tax Authorities have recently announced some of their focus areas for 2019 for tax audits. This early warning allows both individual taxpayers and enterprises to ensure compliance with their Belgian tax obligations.
Enterprises can expect to face more scrutiny in relation to the following subjects:
- Companies who do not fulfill all the conditions of the so-called ‘liquidation reserve’ (Art. 184 quater ITC ’92);
- Companies having failed to report all their income (especially income from abroad);
- Abnormal turnover compared to similar enterprises or fluctuations compared to previous years and other parameters;
- Non-recurring costs of exceptional size or impact;
- Companies set up as a holding, performing a capital increase and afterwards a non-taxable capital decrease.
Individual taxpayers matching following criteria also have a higher risk for a tax audit:
- Individuals claiming tax benefits for alimony payments made to people living abroad;
- Company directors or employees who have claimed a deduction for actual expenses rather than the lump sum amount;
- Owners of real estate who rent out to people who use the property for professional purposes and fail to correctly report the income in their tax return;
- Individuals who failed to correctly report the movable income on foreign bank accounts;
- Individuals that have not filed their tax returns (even after a first reminder). If frequently not filed, the individuals will become subject to in-depth investigations.
The transparency on focus areas is done annually so as to stimulate taxpayers to comply with their obligations. Obviously, enterprises and individuals not falling under the above mentioned categories can also be audited. As in prior years, the Belgian Tax Authorities continue to use data-mining techniques to identify risk areas and select taxpayers for in-depth investigations.
For further insights and to understand the potential implications for your organization please contact us.