Companies must declare any direct or indirect payments it makes to persons located in 'tax havens' via a separate form in their corporate tax return. This applies in cases where payments exceed the amount of EUR 100,000 per taxable period. If this declaration is not made, the payment is not deductible as a business expense.
Belgian list of tax havens has been expanded
There is both a Belgian list and an OECD list of tax havens. The Belgian list (consisting of countries with a nominal corporate tax rate lower than 10%) was expanded by Royal Decree of 1 March 2016 (applicable for payments from 1 January 2016) by adding the following five countries: the Marshall Islands, Uzbekistan, Pitcairn, Somalia and Turkmenistan. However, Andorra, the Maldives and Moldova were removed from the list. The OECD list identifies those countries that do not meet the OECD standard on transparency and exchange of information. The only jurisdiction currently on the list is the British Virgin Islands, which also appears on the Belgian list.
Expansion of scope
The Programme Act of 1 July 2016 also made the following changes to the scheme:
- +Payments to a permanent establishment or a bank account in a tax haven now qualify as well;
- +A country only needs to appear on the OECD list at the time when payment is made and no longer during the entire taxable period, for the reporting requirement to apply;
- +Countries with a 'normal' tax rate for domestic income but with an actual tax rate less than 15% for non-domestic income (= offshore jurisdictions such as Hong Kong and Singapore) now also count as tax havens.
In principle, the Programme Act entered into force from 14 July 2016. However, it is still possible that a Royal Decree may be issued to the effect that payments before this date also fall under the scheme.
If you are not sure whether certain payments that you make need to be declared, then please feel free to contact us for more information about the reporting obligation.
We base our advice on current legislation, interpretations and legal doctrine. This does not prevent the administration from being able to challenge it or to change existing interpretations.