BELGIUM ANSWERS TO THE QUESTIONNAIRE ON MUTUAL ASSISTANCE IN

BELGIUM ANSWERS TO THE QUESTIONNAIRE ON MUTUAL ASSISTANCE IN TAX AFFAIRS I. De Troyer Universiteit Antwerpen (University of Antwerp), Belgium M. Maus Vrije Universiteit Brussel ( Free University of Brussels ) Belgium Universiteit Antwerpen (University of Antwerp), Belgium II. Questions of implementation 1) National implementation • Council Directive 76/308/EEC of 15.03.1976 was implemented by a Belgian law of 20.07.1979 (B.S.-M.B. 30.08.1979). Subsequent modifications of this law: - extension of the scope to VAT claims: by a law of 08.08.1980 (B.S.-M.B. 15.08.1980). - extension of the scope to excise duties: by a law of 30.01.1996 (B.S.-M.B. 21.02.1996). - extension of the scope to direct taxes and taxes on insurance premiums (Directive 2001/44/EG): by a law of 29.01.2004 (B.S.-M.B. 13.02.2004). • Council Directive 77/799/EEC of 19.12.1977 was implemented by a Belgian law of 08.08.1980 (B.S.-M.B. 15.08.1980). • Commission Directive 2002/94/EC of 09.12.2002 was implemented by a law of 04.07.2004, which amended the above-mentioned law of 20.07.1979 (B.S-M.B. 29.07.2004). (note: the first Commission Directive laying down detailed rules for implementing certain provisions of Directive 76/308/EEC was not transposed by a Belgian law but only by administrative circulars). Later amendments: - Directive 2004/79/EG – which modified annex IV to the Commission directive (form for communication of statistics on recovery assistance) was implemented by a law of 22.05.2005 (which amended the law of 20.07.1979) (B.S.-M.B. 27.05.2005, 2d ed.). - Directive 2006/84/EG – which modified annex IV to the Commission directive was implemented by a law of 27.04.2007 (B.S.-M.B. 10.05.2007). • Council Directive 2003/48/EC of 03.06.2003 was implemented by a Belgian law of 17.05.2004 (B.S.-M.B. 27.05.2004). Special remark : According to the articles 10 and 12 of the Council Directive the system of exchange of information does not apply in Belgium, as well as in Luxemburg and Astria. In these countries a withholding tax-sytem is valid during a transitional period. This means that instead of the exchange of information Belgium, Luxemburg and Astria are levying for now a withholding tax on the interests payments of which they retain 25 % of their revenue and transfer 75 % of the revenue to the Member State of residence of the beneficial owner of the interest. 2) All legal rules can be found in formal law : the laws of 20.07.1979, 15.08.1980, 17.05.2004 and 04.07.2004. Special remarks: - Art. 10 of Directive 76/308/EEC: "the claims to be recovered shall not necessarily benefit from the privileges accorded to similar claims arising in the Member State in which the requested authority is situated" → Belgium does not grant these privileges to claims of other states. Art. 12(2), 2nd al. (concerning the possibility to continue the recovery of a contested claim): this is not allowed in Belgium. 3) There is no constitutional frame that rules the mutual assistance in tax matters. 4) The Belgium State concluded bilateral agreements with Italy ( 11.07.1997 ), the Netherlands ( 25.09.1997 ), France ( 10.07.2002 and 23.06.2006 ), Lithuania ( 04.05.2007 ) Latvia ( 21.08.2007 ) and the United States ( 28.12.2007 ) 5) The scope of application of the Belgian law was extended by a law of 17.06.2004 and a law of 20.06.2005 to direct taxes and taxes on insurance premiums. 6) The Belgian law ( article 338 of the Belgian Income Tax Code ) simply stipulates that enquiries carried out to provide information for a foreign tax administration should be carried out by the Belgian tax administration in the same way and under the some conditions as the enquiries carried out to collect this information for its own purposes. This means that the Belgian tax administration who is asked to start a tax enquiry by a foreign tax administration is bound by the same legal restrictions which apply for a national Belgian tax enquiry. For instance the Belgian tax administration has to refuse its cooperation when the information that is asked falls under the Belgian bank secrecy law. ( article 318 of the Belgian Income Tax Code ) The provision of information may be refused where it would lead to the disclosure of a commercial, industrial or professional secret or of a commercial process, or of information whose disclosure would be contrary to public policy. The competent authority of a Member State may refuse to provide information where the State concerned is unable, for practical or legal reasons, to provide similar information. 7 a) - Art. 26 double - Art. 26 double - Art. 26 double - Art. 26 double information - Art. 26 double - Art. 25 double - Art. 27 double - Art. 20 double - Art. 26 double - Art. 26 double tax tax tax tax tax tax tax tax tax tax treaty treaty treaty treaty treaty treaty treaty treaty treaty treaty of of of of of of of of of of 10.03.1964 25.10.1988 14.05.1996 16.12.1996 16.10.1969 15.11.1999 18.05.1976 10.03.1964 11.04.1967 25.05.2004 with with with with with with with with with with Austria: extensive information Bulgaria : extensive information Cyprus : extensive information Czech Republic : extensive Denmark : extensive information Estonia : extensive information Finland :extensive information France : extensive information Germany : extensive information Greece : extensive information - Art. 26 double - Art. 26 double - Art. 26 double - Art. 26 double - Art. 26 double - Art. 26 double - Art. 26 double - Art. 29 double information - Art. 26 double - Art. 26 double - Art. 27 double - Art. 26 double - Art. 26 double - Art. 26 double - Art. 26 double - Art. 26 double information. tax tax tax tax tax tax tax tax tax tax tax tax tax tax tax tax treaty treaty treaty treaty treaty treaty treaty treaty treaty treaty treaty treaty treaty treaty treaty treaty of of of of of of of of of of of of of of of of 19.07.1982 24.06.1970 29.04.1983 21.04.1999 26.11.1998 17.09.1970 28.06.1974 05.06.2001 20.08.2001 16.07.1969 04.03.1996 15.01.1997 22.06.1998 24.09.1970 05.02.1991 01.06.1987 with with with with with with with with with with with with with with with with Hungary : extensive information Ireland : extensive information Italy : extensive information Latvia : extensive information Lithuania : extensive information Luxembourg : extensive information Malta : extensive information the Netherlands : extensive Poland : extensive information Portugal : extensive information Romania : extensive information Slovakia : extensive information Slovenia : extensive information Spain : extensive information Sweden : extensive information the United Kingdom : extensive b) Every treaty with the Member States has a extensive information clause like in article 26 of the OECD-model. c) The new article 26 of the OECD model double tax treaty is included in the Treaty of 27.11.2006 between Belgium and the United States of America which entered into force 28.12.2007. In Belgium bank secrecy laws do exist but merely for the purpose of income tax. ( article 318 of the Belgian Income Tax Code ) For the use of income tax, it is not possible for the tax authorities to obtain financial information from the bank itself, regarding its clients. Bank secrecy is however lifted when a tax enquiry shows that there exists a tax fraud mechanism organised or set up by the bank. 8) The new article 27 in the 2002 version of the OECD model double tax treaty has not yet been included in any double tax treaty concluded by Belgium. 9) Belgium has ratified the joint Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters signed in Strasbourg on 25.01.1988. It was ratified by a law of 24.06.2000 (B.S.-M.B. 17.10.2000) and entered into force on 01.12.2000 (Belgium made a reservation so as to exclude its application to claims already existing before 01.12.2000). 10) According to article 203 of the Belgian Income Tax Code, a country is indicated as a tax haven when its tax system is more favourable compared to the Belgian tax system. The countries that from a Belgian viewpoint are considered to be a tax haven are listed by the Government. ( art. 73quater of the Royal Decree in execution of the Belgian Income Tax Code ) The following countries are indicated : Afghanistan, Aldernay, Belize, Bosnia and Herzegovina, Burundi, Cape Verde, the Central-African Republic, the Comoros, the Cook islands, Cuba, Dominica, Equatorial-Guinea, Gibraltar, Grenada, Guernsey, Guinea-Bissau, Haïti, Herm, Iran, Irak, Jersey, Kiribati, North Korea, Laos, Liberia, Liechtenstein, Macau, the Maldives, the Isle of Man, the Marshall Islands, Mayotte, the Federation of Micronesia, Monaco, Montserrat, Namibia, Niue, Oman, Panama, Saint Christopher and Nevis, Saint Lucia, Saint-Pierre and Miquelon, Saint Vincent and the Grenadines, Samoa, American-Samoa, Sao Tomé and Principe, the Seychelles, Somalia, Tuvalu, Oezbekistan, the British Virgin Islands and the American Virgin Islands. There are no information exchange treaties with these countries, based on the 2002 OECD model. 11) There are no specific rules that oblige subsidiaries to provide information held by the parent company. However in general the tax administration can oblige third parties ( such as a subsidiary ) to provide information on other taxpayers as far as this information is necessary to determine these other taxpayers correct liability regarding Belgian Income Tax. There is no direct international relevance. 12) Direct legal assistance for fiscal offences is not stipulated in the Belgian double tax treaties. Nevertheless there are several double tax treaties which foresee that the exchange of fiscal information can be used afterwards for the purpose of criminal prosecution in tax matters. This is the case for the double tax treaties with Denmark, Germany, Great Brittan, South Korea, Malta, Marocco and Portugal. If foreign tax information show that criminal offences have been committed by the taxpayer, then the tax administration has the obligation to inform the prosecutor so that a criminal investigation can be started. 13) The law of 11th May 2005 ratified the European Convention on Mutual Assistance in Crime Matters and its additional Protocol in Tax Matters. There is a general definition of tax fraud implemented in the Belgian Tax Codes saying that there is tax fraud whenever a person violates the tax regulation with a criminal intention or with the intention to harm. The legal definition of tax fraud can be found in article 449 of the Belgian Income Tax Code. 14) In Belgium there is no borderline between the application of administrative assistance on the basis of tax treaties and the assistance on the basis of the conventions for the assistance in criminal matters. This is due to the fact that there is a clear separation between a tax enquiry on the one hand and a criminal investigation on the other hand. This means that even in case of a criminal prosecution, the tax enquiry is still ongoing and international legal assistance is possible. 15) Apart from the implementation of EU-law, there is no specific influence of EU-regulations on the rule and practice on the prevention of tax fraud and tax circumvention. 16) Mutual recovery assistance is also provided in the following treaties with other Member States: • double tax treaties on taxation of income and capital: Art. Art. Art. Art. Art. Art. Art. Art. Art. Art. 21 27 27 28 27 27 27 28 27 27 double double double double double double double double double double tax tax tax tax tax tax tax tax tax tax treaty treaty treaty treaty treaty treaty treaty treaty treaty treaty of of of of of of of of of of 10.03.1964 11.04.1967 16.10.1969 18.05.1976 29.04.1983 05.02.1991 14.06.1995 04.03.1996 14.05.1996 15.01.1997 with France with Germany with Denmark with Finland with Italy with Sweden with Spain with Romania with Cyprus with Slovakia - Art. Art. Art. Art. Art. Art. 27 double tax treaty of 26.11.1998 with Lithuania 27 double tax treaty of 21.04.1999 with Latvia 26 double tax treaty of 05.11.1999 with Estonia 30-31 double tax treaty of 05.06.2001 with the Netherlands 27 double tax treaty of 20.08.2001 with Poland 26 double tax treaty of 25.05.2004 with Greece. Note: the double tax treaties with Cyprus and Slovakia only offer a limited recovery assistance (assistance in so far as needed to avoid that taxable persons benefit unlawfully from an exemption or a reduced tax rate granted on the basis of this treaty). • Art. 15 of the double tax treaty of 20.01.1959 with France to avoid double taxation of inheritance and registration duties provides for mutual recovery assistance for inheritance taxes. • The Benelux convention on mutual assistance for the recovery of taxes, concluded by Belgium, the Netherlands and Luxemburg, was signed on 05.09.1952 and entered into force on 08.11.1956. (With regard to income taxes, this convention is no longer used in the relationship between Belgium and the Netherlands, as it has been replaced by the new double tax treaty between these countries). III. Questions of use Questions of use in relation to domestic law 1) First of all it is important to say that the Belgian tax laws are independently structured. This means that there is no general law which regulates the various acts and activities of the tax administration. The determination of the investigation powers of the tax administration has to be done by looking into each tax code seperatly. In general a distinction can be made between an audit concerning the taxpayer’s own tax affairs and an audit of a third party. In case of an Income Tax audit the taxpayer’s is first of all obliged to present his books and accounts to the tax administration. Article 315 of the Belgian Income Tax Code foresees that that everybody who is liable to pay taxes, is obliged to present the tax administration for the purpose of their examination his books and accounts which are necessary to establish the amount of his taxable income. This article also stipulates that these books and documents must be retained in one of the rooms of the taxpayer, which can be in his office, agency, residence or any other private or professional premises. The retention period is five years after the taxable (accounting) period. Apart from this obligation, article 316 of the Belgian Income Tax Code foresees that the taxpayer is obliged to answer any written or oral questions within one month of these questions reaching him. In case of a VAT-audit article 61 of the Belgian Value Added Tax Code regulates the obligations to provide access to information. Article 61 of the Value Added Tax Code, obliges every taxpayer/company owner is to present the books and accounts which, under article 60 of the Value Added Tax Code he is required to retain for a period of seven years, to present to the tax auditor competent for VAT audits, if he so requests. Complementary to these provisions article 61 of the Value Added Tax Code stipulates that VAT officers are authorized to take with them any books and documents which must be retained by the taxpayer as well copies of these, provided he issues a receipt. Article 62 of the Belgian Value Added Tax Code regulates the obligations to provide information. This article stipulates that if asked by tax officers of the value added tax administration every person is obliged to provide in writing or verbally all information in order to establish the correct amount of VAT he, or a third party, has to pay. The Belgian Income Tax Code and the Belgian VAT-code authorize the tax administration to request information form a third party. In the Belgian Income Tax Code article 322 authorize the Tax Administration to carry out structured and targeted actions to obtain information and intelligence and to question third parties. Article 323 of the Belgian Income Tax Code authorizes the administration to carry out structured and targeted investigations for all or a part of the activities of the third party and to demand information about any person or group of persons, even about those who are not identified by name. The competences of the tax administration to obtain access to information kept by financial institutions in the course of a third party investigation are restricted as far as the tax audit concerns Belgian Income Tax. In the Income Tax Code a fiscal banking secrecy is stipulated in favour of the taxpayers ( article 318 of the Belgian Income Tax Code ) which forbid the Tax Administration to request financial institutions to provide information about their clients. This bank secrecy is however lifted in cases in which the existence of a mechanism for evading taxes is suspected, and in which the bank is suspected of being an accomplice in such a mechanism. The Belgian Value Added Tax Code does not regulate the third party investigation in separate articles. The articles 61, 62 and 62bis of the Value Added Tax Code each stipulate that the powers in these articles also apply to audits and investigations regarding the taxes to be paid by third parties. The exchange of information between various (national) government agencies has been regulated by law for both direct and indirect taxes. Section 327 of the Income Tax Code stipulates that various government agencies are obliged to provide information to the tax administration. This Section only applies to the flow of information to the tax administration (upon its request).75 The obligations to provide information for collecting value added tax is regulated in Section 93.14 of the Value Added Tax Code. 2) In case the requested party fails to supply the requested information during a Income Tax audit and during the normal tax assessment, the tax administration can impose a administrative fine of 50,00 Euro to 1.250,00 Euro. Tables have been published stating which fine will be imposed for various infringements. The fines can be reduced or remitted following a request by the taxpayer to the tax officer authorized by the Regional Director. Apart from this administrative fine, if a tax consultant has been found guilty of an administrative or fiscal offence, for instance by committing tax fraud, as an additional punishment he can be denied the right to represent taxpayers for a period of up to five years. The sanctions in the Value Added Tax Code can which can be imposed for infringements of the laws and regulations on VAT during a tax audit are laid down in the article 70, § 4,of the VAT-Code. This article stipulates that a administrative fine can be imposed of 25,00 Euro to 2.500,00 Euro. Apart from the administrative sanctions both the Income Tax Code and the VATCode state explicitly that criminal sanctions can be imposed, irrespective of the provision regarding administrative sanctions. These types of sanctions are thus independent of one another and can, and in practice are and will be, applied independently. 3) The Belgian Tax Administration is not allowed to change or adjust questions of foreign tax administrations. 4) There are no specific restrictions which forbid the Belgian Tax Administration to use the information for the purpose of assisting another country in order to adjust the already assessed income tax. On this rule, there is one exception, namely the Belgium-US double tax treaty. This treaty stipulates that in no case a contracting state shall decline to supply information requested by the other Contracting State because the information is held by a bank, other financial institution. This means that the requested contracting state has the power to ask for the disclosure of information and to conduct investigations and hearings notwithstanding any contrary provisions in its domestic tax laws. From the Belgian point of view this means that the Belgian bank secrecy law does not apply in the Belgium-US relation. If Belgium is asked by the US to provide financial information held by a bank, then Belgium has to comply with this request. However in this case Belgium has to respect its own domestic law and in particular its own banks secrecy, so that this information can not be used for domestic purposes. 5) There is no information available for this question. Questions of use in general 6) In the Council Directive the Minister of Finance or his appointed representative are nominated as the competent authority. In practice it are the central tax and customs authorities, established in Brussels who organise the international assistance in tax matters. There are no specific rules that organize the way of answering of foreign request. However Belgian courts already stated that only the competent authority can request for international assistance and can answer requests from foreign tax authorities. If the exchange of information is requested by local tax administration then the exchange of information is illegitimate and can not be used for tax purposes (see the court decisions of Liège, 20/03/2002 and Antwerp, 15/03/1996). There are no differences between the spontaneous and the automatic exchange of information in this regard. 7) If the requested information is not in the hands of the competent authority, then the Belgian tax administration is obliged to start a tax examination in order to obtain the information. In this case during the tax examination the Belgian tax administration has to respect the Belgian legislation. 8) In the administrative arrangement between Belgium and France of 01/07/2006 it is foreseen that the local tax administrations can exchange information directly, without passing through the central tax authorities ( i.e. the competent authority ). However this possibility is restricted to the local tax administrations in de border area between Belgium and France. 9) In fact the same organization applies when the exchange of information is based on the Council Regulation 1798/2003. The exchange of information takes place on the highest administrative level with the central tax authorities. Until now there is only one exception, namely the arrangement between Belgium and France of 01/07/2006 which allows a direct exchange of information between the local tax administrations in de border area. 10) Authorities dealing with incoming requests for recovery: central tax and customs authorities, established in Brussels. Organisation of the recovery within Belgium: The recovery is attributed to local recovery offices (separate from the offices responsible for the tax assessment). A judgement of a national court is not required to collect another Member State's tax. The title permitting enforcement transmitted by the applicant authority of another Member State may have to be replaced by a new title permitting enforcement, drawn up by a Belgian recovery officer (in particular to take account of the national legislation concerning the territorial use of languages). 11) Belgium has no specific bilateral treaties dealing with the matter of legal assistance regarding fiscal offences. 12) Requests for international assistance are usually based upon one legal instrument. However there are a number of international agreements ( with Italy ( 11.07.1997 ), the Netherlands ( 25.09.1997 ), France ( 10.07.2002 and 23.06.2006 ), Lithuania ( 04.05.2007 ) Latvia ( 21.08.2007 ) and the United States ( 28.12.2007 ) ) made in execution of several legal instruments. International assistance with these countries is based upon these agreements and has in fact a wider legal background. In case of conflicting rules in different instruments, there is a clear order that has to be followed. ( see f.i. DE BROE L., Internationale vestigingsbijstand tussen België, de EEG-lidstaten, Zwitserland en de Verenigde Staten van Amerika op het vlak der Inkomstenbelastingen en B.T.W., T.R.V., 1990, 75; DOCCLO C., L’échange de renseignements en matière d’impôts sur les revenus, in Les paradis fiscaux et l’évasion fiscale, Brussel, Bruylant, 2001, 407; GOLDSWORTH J., Exchange of information. Recents developments, European Taxation, 1982, 213; HINNEKENS L., Compatibility of bilateral tax treaties with European Community Law – Application of the rules, EC Tax Review, 1995, nr. 4, 230; LAGAE J.P., Internationale samenwerking tussen fiscale administraties, In Actuele Problemen van Fiscaal Recht, XVe Postuniversitaire cyclus W. DELVA, Antwerpen, Kluwer, 1989, 301) Regarding the specific relation between the double tax treaties and the Council Directive 77/799/EEG there are two situations that need tot be distinguished. First of all when a double tax treaty foresees in lager possibilities to cooperate then the Council Directive, than it is in Belgium generally accepted that the double tax treaty has priority on the Council Directive. ( cfr. Article 11 of the Council Directive ) If on the other hand the scope of the Council Directive is lager then the scope of the double tax treaties, then it is accepted that the rules of the double tax treaties are prior to the Council Directive. However this is only the case as far as the rules of the Council Directive have no direct application in the Member States. In this is the case then the rules of the Council Directive are nevertheless prior to the rules of the double tax treaties. There is no information available regarding the preferred legal basis to exchange information. 13) According to article 338, § 8 of the Belgian Income Tax Code, the Belgian State can refuse its cooperation if the provision of the requested information would reveal commercial, industrial, business or professional secrets. This rule is implemented in the Belgian legislation, but there are no further specific administrative precautions made in this respect. Precautions are nevertheless necessary. In the Brussels court decision of 06/10/1980 the Belgian State was ordered to pay indemnities to a Belgian company for being careless in requesting information from the Italian tax authorities concerning the Italian suppliers of the Belgian company. In the court decision it was said that the Belgian tax administration has to pay attention to the economic consequences of the exchange of information. 14) According to article 338, § 9 of the Belgian Income Tax Code, the Belgian State will only provide the requested information if : - the information is supplied to persons who are directly involved in the tax proceedings - the information will be used solely for tax proceedings or legal procedures concerning tax issues - the information will not be used for other than tax purposes. This rule is implemented in the Belgian legislation, but there are no further specific administrative precautions made in this respect. 15) Art. 16 of Directive 76/308/EEC has been transposed into Art. 21 of the law of 20.07.1979. A violation of this provision would lead to the invalidity of the acts based upon the illegally obtained documents or information. 16) Art. 23 of Directive 2002/94/EC has been transposed into Art. 20quater of the law of 20.07.1979. A violation of this provision would lead to the invalidity of the acts based upon the illegally obtained documents or information. 17) If the information is not available, then the Belgian tax administration can according to article 338, § 9 of the Belgian Income Tax Code execute a tax investigation in order to obtain the requested information. This examination will however only be executed if the measures that are needed to obtain the information are possible within the frame of the Belgian legislation. 18) Simultaneous tax examinations are very rare in Belgium and it is not clear on which occasions they are requested by the Belgian tax administration. According to the statistics 2006 ( the statistics of 2007 are not yet available ) of the tax administrations there were only 4 simultaneous tax examinations requested by the Belgian State and 7 simultaneous tax examinations in Belgium requested by foreign states. Article 338,§7 of the Belgian Income Tax Code allows the presence of foreign tax inspectors on Belgian soil in order to take part in tax examinations. 19) In Belgium bank secrecy laws exist but merely for the purpose of income tax. ( article 318 of the Belgian Income Tax Code ) For the use of income tax, it is not possible for the tax authorities to obtain financial information from the bank itself, regarding its clients. In the Belgium – US double tax treaty it is however stipulated that the bank secrecy regulation does not apply when information is asked by the US-tax administration. This means that from a Belgian point of view during a tax examination in income tax the tax inspector has to respect the bank secrecy regulation. If however bank information is asked by the US tax administration then Belgium agreed to lift the bank secrecy. This information can only be used for the purpose of the US taxation and can not be used for the assessment of Belgian taxes. 20) There is no clear tendency showing that a specific method is used more often. 21) There is no information available on this subject. 22) Tax examinations and criminal investigations for tax fraud are executed separately since Belgian legislation clearly forbids direct communication between the tax inspectors and the criminal prosecutors. Exchange of information between the tax administration and the department of justice is only possible under very strict conditions. ( see article 327 of the Belgian Income Tax Code ) On the one hand during the criminal investigation tax inspectors can only be interrogated as witnesses not as experts. ( see article 463 of the Belgian Income Tax Code ) This means that tax inspectors can not take part in any criminal investigation. For example it is not possible for them to be present when a search warrant is executed. On the other hand the tax administration can only get access to documents and information regarding the administration of justice after approval by the ProcuratorGeneral or the Judge Advocate General. 23) Quantities and figures: 2002 Exchange of information concerning tax assessments 2002 from/to Directorate Assesments EU Automatic Exchange from other states to 3 Belgium from Belgium to 14 other states Spontaneous Exchange other states from/to Customs & Excise EU from/to Registration duties office other states from / to Special tax inspection EU other states Total 2 2 -38 --12209 -3044 -----12214 3060 Total other EU states from other states to 1261 Belgium from Belgium to 273 other states Exchange on request from other states to 1941 Belgium from Belgium to other states 1689 1 1 --- --- --- --- 34 24 --- 1296 299 Total 24 24 1278 1301 489 818 -19 --- 76 114 -7 3808 3972 Exchange of requests concerning the collection of taxes 2002 from/to Directorate Recovery (relating to direct taxes andVAT) EU-states requests from other states to Belgium requests from Belgium to other states Total 2003 Exchange of information concerning tax assessments 2003 from/to Directorate Assesments EU Automatic Exchange from other states to 7393 Belgium from Belgium to other states 18 Spontaneous Exchange other states from/to Customs & Excise EU from/to Registration duties office other states from / to Special tax inspection EU other states Total -3 ------------7393 21 Total 484 2012 2496 from/to from/to Customs & Registratio Excise n duties office other states EU other EU other total 15 69 84 26 38 64 ----9 9 ---525 2128 2653 other EU states from other states to 725 Belgium from Belgium to 301 other states Exchange on request from other states to 1817 Belgium from Belgium to other states 2264 11 4 --- --- --- --- 18 44 -3 754 352 Total 17 34 1056 659 709 611 --- --- 37 105 -2 3636 3675 Exchange of requests concerning the collection of taxes 2003 from/to Directorate from/to Customs & Recovery (relating to Excise direct taxes and VAT) EU-states other states EU-states other states total 468 1963 2431 16 2 18 12 37 49 ---496 2002 2498 requests from other states to Belgium requests from Belgium to other states Total 2004 Exchange of information concerning tax assessments 2004 from/to Directorate Assesments EU other states from/to Customs & Excise EU from/to Registration duties office other states from / to Special tax inspection EU other states Total other EU states Automatic Exchange from other states to 5759 -Belgium from Belgium to other states 15297 -- --- --- --- --- --- --- 5759 15297 Spontaneous Exchange from other states to 406 Belgium from Belgium to other states 433 Exchange on request from other states to 1464 Belgium from Belgium to 1241 other states Total ----------12 52 -5 418 490 Total --1116 632 554 711 -19 --38 59 -5 3172 2648 Exchange of requests concerning the collection of taxes 2004 from/to Directorate from/to Customs & Recovery (relating to Excise direct taxes and VAT) EU-states other states EU-states other states total 324 980 1304 13 83 96 23 54 77 ---360 1117 1477 requests from other states to Belgium requests from Belgium to other states Total 2005 Exchange of information concerning tax assessments 2005 from/to Directorate Assesments EU other states from/to Customs & Excise EU from/to Registration duties office other states from / to Special tax inspection EU other states Total ------------8661 128357 Total other EU states Automatic Exchange from other 8661 -states to Belgium from Belgium to 128357 -other states Spontaneous Exchange from other states to 455 Belgium from Belgium to 444 other states Exchange on request from other states to 1548 Belgium from Belgium to other states 1329 --- --- --- --- --- 13 128 2 14 470 586 Total --- 1097 627 466 493 --- --- 46 71 18 6 3175 2526 Exchange of requests concerning the collection of taxes 2005 from/to Directorate from/to Customs & Recovery (relating to Excise direct taxes andVAT) EU-states other states EU-states other states total 71 3 412 2 -17 52 -557 requests from other states to Belgium - for information - for notification - for recovery - total Requests from Belgium to other states - for information - for notification - for recovery - total Total 2006 779 3 512 1780 34 -4 45 57 97 --1934 1377 Exchange of information concerning tax assessments 2006 from/to Directorate Assesments EU Automatic Exchange other states from/to Customs & Excise EU from/to Registration duties office other states from / to Special tax inspection EU other states Total other EU states from other states to 17992 17 Belgium from Belgium to 50845 -other states Spontaneous Exchange from other states to 594 Belgium from Belgium to other states 360 Exchange on request from other 1821 states to Belgium from Belgium to 1584 other states --- --- --- --- --- --- 18009 50845 Total 7 3 --- --- --- --- 9 34 -1 610 398 Total 18 19 848 579 264 401 --- --- 25 63 1 16 2977 2662 Exchange of requests concerning the collection of taxes 2006 from/to Directorate from/to Customs & Recovery (relating to Excise direct taxes andVAT) EU-states other states EU-states other states total requests from other states to Belgium - for information - for notification - for recovery requests from Belgium to other states - for information - for notification - for recovery Total 88 18 312 4 -6 2 6 12 -- 94 24 330 904 -1447 2769 40 -2 52 23 2 40 85 --- 967 2 1377 2906 Exchange of requests concerning the collection of taxes 2007 from/to Directorate Recovery (relating to direct taxes andVAT) EU-states Other states from/to Customs & Excise EU-states Other states total requests from other states to Belgium - for information - for notification - for recovery requests from Belgium to other states - for information - for notification - for recovery Total 84 57 365 4 3 16 22 -- 87 73 391 988 2 1245 2741 52 2 58 12 11 34 98 --- 1052 13 1281 24) Until now, there are no specific statistics available regarding the Council Directive 2003/48/EC. According to newspaper articles in 2007 Belgium did receive 132.000 reports from other Member States. 25) 26) 27) 28) 29) There is no information available. There is no information available. There is no information available. There is no information available. There is no information available. IV. Questions of efficiency of the mutual assistance in tax affairs 1) I don’t think that one method is more efficient then another. I think that the combination of methods is the best way for the member states to cooperate. It is clear that in individual cases the exchange of information on request is a very efficient method to obtain information. On the other hand the automatic and spontaneous exchange of information allows the Member States to obtain information which they would otherwise never discover. For instance, since a couple of years there is an automatic exchange on information between France and Belgium regarding real estate. Since this automatic exchange it is clear that of lot of Belgians have real estate in France which they had never declared to the Belgian tax administration. 2) The duty to cooperate with the tax inspectors is in fact not different whether the tax examination concerns a foreign country or not. This is also the case if the exchange of information falls under the Council Directive. There is only one exception on this rule, namely the Belgium US – double tax treaty, which stipulates that the Belgian bank secrecy law does not apply if information is requested by the Belgian tax authority. It is clear that the lifting of the bank secrecy is a very sufficient manner to reduce tax evasion and tax avoidance since it gives a clear view on the taxpayer’s financial situation. 3) As far as I’m concerned there are no differences between the Council Directive and the double tax treaties since they both allow automatic and spontaneous exchange of information and exchange on request. The only exception on this finding is again the Belgium US double tax treaty which exclude the bank secrecy laws if information is asked by the US authorities. 4) There are no known substantial problems regarding the VIES system. The only remark which now and then occurs is the fact that there could be a delay in the input of the national data in the VIES – system so that the VIES information is not always accurate. 5) Belgium does not cooperate with the exchange of information system of the Council Directive 2003/48/EC. For a transitional period Belgium are, together with Luxembourg and Austria allowed to apply a withholding tax instead of providing information. Until now there is no official information available regarding the efficiency of the exchange of information. According to newspaper articles Belgium received in 2007 a number of 132.000 reports from Member States. It seems that for official information the Belgian administration awaits the EU-report on the application of the Council Directive which is expected by the end of 2008. It is however clear that the limited definition of interest payments allows taxpayers quite easily to escape from the application of the Council Directive by investing in alternative financial products. The Liechtenstein-case is a good example of this finding. 6) It is clear that international exchange of information is crucial in the battle against tax evasion and tax fraud and in advance against the distortions in the internal EU market. The internationalisation of the socio economic society automatically results in a further internationalisation of taxation. This means that the international exchange of information will become more and more important for the Member States in their battle against tax evasion and tax fraud. 7) The information enumerated in article 8 of the Council Directive 2003/48/EC seems sufficient to me. 8) 9) 10) 11) There is no information available on this subject. There is no information available on this subject. There is no information available on this subject. There is no information available on this subject. 12) In order to avoid improper use and in order to respect the legal protection of the taxpayer it is necessary that all incoming and outgoing requests for information are centralized within the tax administration. This is the case for the Belgian tax administration where the international exchange of information is the privilege of the central tax administration. This seems quite reasonable to me. 13) I believe that the international exchange of information should be monitored and controlled by a European tax administration. This administration can be the platform for an adequate information exchange between the Member States by ensuring : - that all the conditions for a legitimate request for information are available so to avoid all conflicts between the Member States - that the requested information is delivered within a reasonable period of time that the delivered information meets all the expected requirements that the delivered information is used in respect with the Council Directives. There is no information available on this subject. There is no information available on this subject. 14) 15) 16) As far as I’m concerned the European Convention on Mutual Assistance in Crime Matters is quite effective. However it is obvious that this finding does not apply for the exceptions made by Austria, Luxemburg and Switserland. 17) As far as I’m concerned common audits are indispensable for the tax examinations of multinational corporations. Statistics show however that these kind of tax examinations are very rare. From a Belgian point of view there were in 2006 only 4 common audits organized by the Belgian tax administration. 18) Bank secrecy regulation still exist in the income tax legislation. Every now and then there are political attempts to abolish bank secrecy but until now these attempts were not very successful. 19) Efficiency of the mutual assistance for the collection of taxes. The Belgian authorities do not publish any statistics concerning the results of the mutual recovery assistance. 20) There is no information for Belgium available on this subject. V. Questions of burden of proof 1) Generally spoken, in the Belgian tax legislation it is stipulated that the burden of proof rests on the shoulders of the tax administration. ( f.i. article 339 of the Belgian Income Tax Code ) Exceptions on this rule are however possible. If a taxpayer has not submitted a regular tax return, or if a taxpayer has failed to submit the necessary documents substantiating his tax return, or if a taxpayer has not provided information demanded, or if a taxpayer has not responded to a notification of a correction in his tax return, the burden of proof is reversed through imposing an ex officio assessment (estimated assessment). ( f.i. article 351 of the Belgian Income Tax Code ) 2) A) The duties to cooperate are not different if the facts and circumstances of a certain case affect a foreign country. If a taxpayer fails to submit the information demanded then the burden of proof is reversed through imposing an ex officio assessment (estimated assessment). B) In Belgium it is generally accepted that the competent authority can refuse its cooperation if it appears that the competent authority of the requesting Member State did not exhaust all internal tax examination possibilities. 3) The European jurisdiction did not affect the rules regarding the burden of proof in Belgium. VI. Questions of legal protection Legal protection against incoming requests 1) In general the Belgian tax administration has no direct obligation to inform the taxpayer when asked to provide information. However the Belgian tax administration has a period of three years, starting from January 1st of the ‘tax return year’ in which it can examine the taxpayer’s situation. This time limit can be extended to five years in case of fraudulent intent or of the intention to cause damage. If the tax administration intends to extend the regular time-limit, it must notify the taxpayer in writing. This means that when the Belgian tax administration is asked to provide information regarding the forth or the fifth year after the tax return year it has to notify the taxpayer. 2) A hearing is not foreseen in Belgian legislation. 3) The taxpayer is not able to block the exchange of information. However if he is aware of the request ( which is not obvious ) he can start summary proceedings in court in order to prevent the information exchange, for instance if he means that the information exchange would reveal commercial secrets. 4) A potential court procedure has no suspensive effect, but it is clear that if the court rules in favour of the taxpayer that this will effect the probative value of the information. Appeal is possible without suspensive effect. Legal protection against making a request 5) In general the Belgian tax administration has no direct obligation to inform the taxpayer when asked to provide information. However, as said under 1) if the Belgian tax administration wants to request information to a foreign state regarding the forth or the fifth year after the tax return year it has to notify the taxpayer. 6) The taxpayer is not able to block the request of information. However if he is aware of the request (which is not obvious) he can start summary proceedings in court in order to prevent the information exchange. 7) A potential court procedure has no suspensive effect, but it is clear that if the court rules in favour of the taxpayer that this will effect the probative value of the information. Appeal is possible without suspensive effect. Legal protection in general 8) The implementation of the Council Directive did not effect the legal protection of the taxpayer. 9) Every person has in general the obligation to cooperate with the tax administration during a third party investigation. The Belgian tax legislation provides no particular general legal protection for third parties. On this general rule is one exception namely article 334 of the Belgian Income Tax Code. This article stipulates “if (...) a person exercises professional right of non-disclosure, the tax administration will ask the regional regulatory authority of that profession to determine whether or not, and in the affirmative case, to what extent, the request for information or for access to books and records is reconcilable with the respect of that professional right of non-disclosure”. On the basis of this article certain professionals ( such as lawyers, notaries public, physicians, public accountants etc ) can invoke their right to non disclosure in a third party investigation if the information asked by the tax administration falls under their professional secrecy. When referring to article 334 of the Income Tax Code it is important to know whether the profession to which the person claiming the right to non-disclosure belongs, does in fact have a regional regulatory professional authority. A distinction must be made between taxpayers whose profession does and does not have such a regulatory authority. If the profession indeed has such a regulatory or governing body and the taxpayer invokes his right to non-disclosure, the tax administration will submit its request for information to this body. This body will then decide whether or not this request should be met. For professions that do not have a regulatory or governing organization, the tax administration itself has to judge whether or not an appeal to a right to non disclosure is allowed. 10) The Belgian taxpayer is protected by the European Convention on Human Rights, in particular article 6 ( right to a fair trial ) and article 8 ( right on privacy ). Since article 6 of the ECHR does not apply on regular tax issues, the right to a fair trial is only applicable when the tax assessment goes along with an administrative sanction which can be considered ‘criminal’ under the application of article 6 of the ECHR. In the “Silvester’s Horeca Service”-case of 04/06/2004 the European Court of Human Rights stated very clearly that all Belgian proportionate administrative sanctions have a criminal background under the scope of article 6 of the ECHR. This means that the legal protection of article 6 of the ECHR can be called upon by the taxpayer every time the tax administration assesses an administrative sanction together with the tax assessment itself. The right on privacy is applicable in every tax examination and demands a legal background for every measure taken by the tax administration in order to get relevant information for the assessment of taxes. Every investigation measure during a tax exam can be considered a breach of privacy under article 8 of the ECHR and thus requires a legal background. If this legal is not available or if there is an infringement of the scope of the legal background, then there is a violation of the right on privacy which lead to inadmissible evidence. 11) Legal protection of the taxpayer: Art. 16, § 1 of the law of 20.07.1979 provides that the claim and/or the instrument permitting enforcement issued in the State in which the applicant authority is situated can be contested before the competent body (courts) of the State in which the applicant authority is situated (in accordance with Art. 12(1) of Directive 76/308/EEC). Art. 16, § 2 of the law of 20.07.1979 provides that the enforcement measures taken in the State in which the requested authority is situated can be contested before the competent body (courts) of that Member State (in accordance with Art. 12(3) of Directive 76/308/EEC). Belgian tax authorities providing recovery assistance can only take measures in so far as they are in accordance with the Belgian law. Belgian tax authorities can only request recovery assistance from other States if the claim concerned is not contested. 12) The exchanged information can be used in a criminal trial if the requested state gives the permission to do so. ( see article 338 of the Belgian Income Tax Code ) There is no special jurisdictional authorization needed. 13) Tax examinations and criminal investigations for tax fraud are executed separately since Belgian legislation ( law of 04/08/1986 ) clearly forbids direct communication between the tax inspectors and the criminal prosecutors. Exchange of information between the tax administration and the department of justice is only possible under very strict conditions. On the one hand during the criminal investigation tax inspectors can only be interrogated as witnesses not as experts. This means that tax inspectors can not take part in any criminal investigation. For example it is not possible for them to be present when a search warrant is executed. On the other hand the tax administration can only get access to documents and information regarding the administration of justice after approval by the ProcuratorGeneral or the Judge Advocate General. Bank secrecy laws forbid the administration to request information from financial institutions regarding their clients. If financial information is added tot the criminal file, and the tax administration is granted access by the Procurator-General or the Judge Advocate General, then this information can be used for tax purposes. 14) In the Brussels court decision of 06/10/1980 the Belgian State was ordered to pay indemnities to a Belgian company for being careless in requesting information from the Italian tax authorities concerning the Italian suppliers of the Belgian company. In the court decision it was said that the Belgian tax administration has to pay attention to the economic consequences of the exchange of information. 15) According to the articles 10 and 12 of the Council Directive the system of exchange of information does not apply in Belgium, as well as in Luxemburg and Astria. In these countries a withholding tax-system is valid during a transitional period. 16) If on request of the Belgian tax administration, the foreign tax administration infringes tax exam regulations, then it is clear from a Belgian point of view that the obtained information can not be used for tax purposes in Belgium. This was clearly stated in the court decisions of the courts of Antwerp of 15/01/1996 and Mons of 15/10/2003. In both cases a tax assessment was found illegitimate due to the fact that the exchange of information was done by local tax administrations in stead of the competent authority. 17) Until now there are no known cases where an infringement of privacy from mutual assistance occurred.