Taxman Announces Tax Traps

This year, once again, the tax authorities have listed the taxpayers they will target. They like to compare it to announced speed traps. They hope that if you know you are targeted, you will be more careful when completing your tax return for last year.

When do you need to pay attention?

  1. If you are a company director

    Just like employees, company directors can opt to deduct a lump sum by way of business expenses. That is 3 percent of their remuneration as a company director, with a maximum of €2,370. However, they can also prove their real business expenses and it is these business expenses that will be audited carefully.

  2. If you are working across the border

    Cross border workers, such as Belgian residents working in France in the border region, enjoy a favourable tax regime. This year the taxman will check that you did not abuse the system, e.g. worked many days outside the border, even in Belgium, or if you live outside the border region.

  3. If you live beyond your means.

    If the taxman discoers signs of wealth that show that you spend more than you earn, he can ask you to justify your spending. If you cannot explain the difference, you pay tax on your spending as if you had earned it.

  4. If you have made some omissions in your tax return, e.g.
    • if you have declared dependent children who are not dependent anymore ;
    • if you have omitted to declare certain earnings ;
    • if you have omitted to declare income from some properties ;
    • if you have claimed the exemption of a travel allowance when you did not use public transport.
  5. If you have a company, your company can be audited
    • if its profit margin is lower than other companies in the same sector or has varied a lot in comparison to previous years ;
    • if the company is a management company set up for tax optimisation for its directors or for other related companies ;
    • if the company has unduly claimed a VAT credit ;
    • if the company has ceased its VAT activities or has moved from a regime with monthly or quarterly VAT returns to a VAT regime without regular VAT returns.

Press release 21 April 2015 in Dutch or in French

Author: Marc Quaghebeur

Marc Quaghebeur is a Belgian tax lawyer with Cabinet DAVID specialising in international tax issues and cross border estate planning. He is a member of the Brussels Bar and the Society of Trust and Estate Practitioners. He

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