reporting payments made to tax havens | KPMG | BE

Expansion of the obligation of reporting payments made to tax havens

reporting payments made to tax havens

The program law published in the Belgian Official Gazette on 4 July 2016 extends the obligation of reporting payments made to tax havens totaling at least 100.000 EUR per financial year.

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The program law published in the Belgian Official Gazette on 4 July 2016 extends the obligation of reporting payments made to tax havens totaling at least 100.000 EUR per financial year :

The scope of the reporting obligation has been enlarged at three levels:

  • Payments made to permanent establishments and bank accounts in a State considered as a tax haven are also concerned by the reporting obligation
  • The presence of the State on the OECD list at the moment of the payment is sufficient to require its reporting
  • The criteria used to constitute the Belgian list are broader than before

The scope of the reporting obligation has been enlarged as it will not only be applicable to payments made to persons established in tax havens but also to permanent establishments in such a State and to bank accounts managed by such a person or permanent establishment or domiciled in such a State.

 

The program law defines a State as an independent state recognized by the majority of UN members. Parts of those States that can autonomously determine (partially or fully) the taxable base or the corporate tax rate are also considered as a State, thus providing an explicit legal basis why jurisdictions like Jersey, … are on the list.

 

The tax havens are determined by two lists:

  • OECD list 
    • This list includes States which, according to the Global Forum on Tax Transparency and Exchange of Information of the OECD, do not effectively or substantially apply the OECD exchange of information standard. The presence of a State on the list at the moment of the payment is sufficient to require its reporting instead of during the entire taxable period. This list currently contains no States.
  • Belgian list
    • This list contains States without or with low taxation. The criteria used to constitute this list have been expanded.  Will be on the list : 
      •    state(s) outside the EEA 
        • Of which companies are not subject to corporate tax on domestic or foreign income (new criterion)
        • Or which have a nominal corporate tax rate of less than 10% (existing criterion)
        • Or have an effective corporate tax rate on foreign income of less than 15% (new criterion)
    • As the criteria have been expanded it is expected that a new list will be published.   In the meantime the current list in the Royal Decree of 11 March 2016 remains applicable.

 

The new rules enter into force as from 14 July 2016. The law does not specify, but in our view this concerns payments made as from that date.

 

© 2017 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

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