Until recently, Belgian tax policy has been geared to meeting budgetary challenges, especially in the wake of the economic crisis. As public anger in Belgium rose over the tax practices of some multinationals, Belgium’s previous government realized that the fight against aggressive tax planning could help smooth the passage of certain measures through Parliament.
The tax focus of Belgium’s current government, elected in May 2014, continues to be on job creation and economic growth. With salary costs in Belgium becoming prohibitively high relative to its neighbors, Belgium is seeking to reduce its reliance on tax revenue from labor, and to increase revenue from other sources (e.g. energy and natural resource companies, consumption taxes). At the same time, the fight against tax fraud – a key responsibility of Belgium’s Minister of Finance – remains high on the political agenda.
As a founding member of the OECD, Belgium has fully supported the BEPS initiative but has not been an early adopter. So far Belgium has not implemented specific anti-BEPS measures in direct response to the OECD project. However, certain anti-abuse rules to safeguard the tax base of individuals and corporations against aggressive planning have existed for quite some time, and recently the government has taken further steps that are in line with the spirit of the OECD’s BEPS project.
Specific anti-abuse rules backed-up with a general anti-abuse rule (GAAR) have been in place for decades. Interest, royalties and service fees paid to tax havens are not deductible unless the taxpayer can prove that the expenses are connected to transactions actually carried out and do not exceed normal limits. Under the GAAR, a transaction as a whole cannot be opposed to the tax authorities, if they demonstrate by presumptions or any other evidence,that fiscal abuse is one of the transaction’s main drivers.
Recent years have seen significantly stepped-up audits aimed at detecting international tax fraud. A specialized team of about 100 auditors has been allocated to this area, and this centralized team is steering the audits of large multinationals across Belgium.