Since 2010 Belgian companies and permanent establishments of foreign companies must report in their annual tax return all (direct and indirect) payments they have made to tax havens (art. 307 ITC 1992) for a total of EUR 100,000 or more. If they are not reported, these payments are not tax deductible. When reported, such payments are only tax deductible if the taxpayer can justify that the payment was made in the context of an actual and genuine transaction with persons other than artificial tax avoidance schemes.
The law defines as tax havens, in the first place, non-compliant jurisdictions, i.e. jurisdictions that are considered by the OECD Global Forum on Transparency and Exchange of Information as not having effectively or substantially implemented the OECD exchange of information standard.
The Programme law of 1 July 2016 (Belgian State Gazette 4 July 2016) changes the rules.
While in the past the jurisdiction had to be non-compliant during the entire year in which the relevant payment(s) were made, the rule is adapted to say that payments should be reported if they were made in the course of the period during which the jurisdiction was non-compliant.
The second category of tax havens are jurisdictions that have no tax or a low tax. The threshold was set at a nominal corporate tax rate of 10% (art. 179 RD/ITC 1992) and a list of these states was adopted by Royal Decree of 6 May 2010 (see Doc 2010-2090). This definition is now extended to countries outside the European Economic Area which (1) do not levy corporate income tax on domestic or offshore income, (2) that have a nominal corporate income tax rate under 10 %, or (3) with an effective corporate tax rate on foreign income under 15%. The definition of “jurisdiction” is extended to subdivisions of States that have an autonomous competence to levy corporate income tax.
The new rules also apply to payments to permanent establishments located in such jurisdictions, to bank accounts managed by or held with individuals or permanent establishments located in such jurisdictions or to accounts managed by or held with credit institutions in such jurisdictions or by their permanent establishments located in such jurisdictions.
The new rules will apply as of 14 July 2016.