Since January 1, 2010, companies subject to Belgian corporate income tax or Belgian non-resident corporate income tax are obliged to declare (in form 275F) direct or indirect payments exceeding EUR 100,000 to recipients established in so-called ‘tax havens’ (article 307, §1, 4° of the Belgian Income Tax Code). 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.
A tax haven country is defined – amongst others – 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 as a state that has not substantially or effectively applied the OECD exchange of information standard (‘OECD blacklist’).
In November 2013, the OECD published its initial Peer Review results. Luxembourg, Cyprus, the British Virgin Islands and the Seychelles were deemed as failing to meet the OECD Exchange of Information standard. Austria and Turkey were considered as partially compliant.
Based on the above, the Minister of Finance has confirmed that, as from December 1, 2013, all payments to Luxembourg, Cyprus, the British Virgin Islands and the Seychelles must be considered to be payments to ‘tax havens’ that, under certain conditions, need to be reported. For companies having a financial year equal to the calendar year the reporting formalities would start as from assessment year 2015 (for payments made in financial year 2014).
The reporting obligation would only be applicable if these countries remain on the blacklist for the entire financial year 2014.
With regard to payments to Austria and Turkey, the Minister of Finance confirmed that no reporting obligations must be fulfilled.
Note that the OECD’s peer review is still ongoing for certain countries, including Switzerland.