zaterdag 14 november 2015

Belgian fight against tax evasion

As a reminder, the international automatic exchange of financial account information is considered by most countries as particularly efficient in the fight against tax evasion and international tax fraud and is becoming the new global standard (considering the US FATCA legislation, the OECD Common Reporting Standard).

- The Belgian Council of Ministers has approved a draft bill. The draft bill aims at implementing the automatic exchange of information of financial account information between Belgium and cooperating jurisdictions provided for in various legal instruments such as the Directive on Administrative Cooperation as amended on 9 December 2014. The draft bill mainly focuses on the transfer of information from Belgian Financial Institutions to the Belgian competent authority, so that the latter can comply with its obligations towards foreign jurisdictions.
- A new measure regarding fiscal amnesty will be introduced in 2016.

- Cayman Tax (Look-through taxation)

The 'Cayman tax' is named after the Cayman Islands and it is presented as the instrument to hit high net worth individuals who had been able to legally escape taxation by parking their wealth in trusts, foundations or offshore companies. Since Belgium does not have any wealth tax or capital gains tax for individuals, the Cayman tax must shift some of the tax burden from employment to wealth.
The draft bill containing the Cayman tax was approved by Parliament on 24 July 2015 and the bill of 10 August 2015 ("the Bill") was published in the Belgian official Gazette on 18 August 2015. The Bill provides that the Cayman Tax will apply to income received, attributed or made payable by legal arrangements as of 1st January 2015, so with retroactive effect.

In essence, if Belgium based individuals have parked assets abroad with lowly taxed foreign legal structures (lacking any relevant business substance), the structure will be considered transparent for Belgium personal tax purposes and the Belgium based individual will be directly taxed on the income earned by foreign legal structure.

- In 2017 and 2018, the Belgian tax authorities will focus even more on combating tax fraud.

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