Tax

A B&B operator that initially suffered losses due to large investments, but expected profits in the future, had to take on the tax authorities, which denied the deductibility of the losses. The tax authorities argued that the operation was a hobby rather than a professional activity. After an administrative procedure, the objection was upheld and the entire assessment was waived.

A retired Dutch citizen living in Belgium received a supplementary Dutch pension. This supplementary pension was wrongly taxed in Belgium because he was thought to have received tax relief in Belgium, which was not the case. After the tax authorities issued a negative decision on the submitted appeal, a rectification request was filed by the TAX team. The tax authorities had clearly not taken a factual element account and this meant court proceedings could be avoided. This resulted in a cost-effective solution whereby the tax authorities took a positive decision on the rectification request.

We assisted a producer in agricultural products who made a mistake in his declaration and therefore did not obtain exemption from subsidies. An ex officio waiver application was filed by Tuerlinckx Tax Lawyers showing that there was a material error. This request was granted in full.

We helped a butler who travels around Europe with his employer. His income was fully taxed in Belgium, despite not physically working in Belgium for most of the year. To avoid double taxation on his income, we filed an objection. We helped the taxpayer to gather the necessary factual evidence. This resulted in a positive decision, exempting the income from his work abroad from Belgian tax, in accordance with double taxation treaties.

An employee of a Dutch company, working from Belgium, claimed relief from double taxation in the Netherlands to avoid double taxation for two income years. He had to pay taxes in Belgium but had already paid taxes in the Netherlands on the same income. Following a request for mutual consultation between Belgium and the Netherlands, the Netherlands granted the request and refunded the full amount of tax wrongly withheld.

A retired director-major shareholder from the Netherlands, resident in Belgium, had surrendered his self-administered pension in the Netherlands and requested exemption of the pension capital in Belgium. This was important to avoid the capital being subject to the Dutch tax credit and taxed at Belgian progressive rates. The court of first instance ruled in favour, but the tax authorities decided to take the case to the court of appeal.

In practice, Tuerlinckx Tax Lawyers found that natural persons with securities portfolios abroad were not aware of the obligation to declare and pay the tax on stock market transactions since 2017. However, a failure to file is heavily sanctioned in the legislation. We assisted individuals with spontaneous late TOB declarations. Result? The tax administration confirmed in a binding and generally applicable position that the heavy penalties will be waived.

8A Bulgarian company carrying out real estate work on construction sites in Belgium faced significant and unexpected tax claims. Initially, the administration claimed that the company had a material permanent establishment in Belgium. When this argument was refuted, the administration claimed that there was a personal permanent establishment as the director was present in Belgium when negotiating and concluding agreements. This issue was hugely significant as the income from a permanent establishment would be subject to Belgian corporation tax. It would also affect withholding tax on employees' income. After filing a notice of appeal, both assessments were quashed completely and no reappraisal followed. The tax administration acknowledged that there was no material or personal permanent establishment.

A catering company was accused by the tax administration of generating turnover off the books. This resulted in significant corporation tax and VAT assessments, including heavy fines. This would have left the company with more than a million euros in tax debts and led to bankruptcy. The intervention of Tuerlinckx's experienced lawyers during the valuation phase resulted in an agreement with the tax authorities, with only 25% of the amount initially claimed being due.

A couple was subjected to an index settlement by the tax administration for alleged irregularities, including unusual cash deposits and transfers from the company account to their private account. The audit resulted from a CTIF-CFI notification by the bank. This led to allegations of misuse of corporate assets, undeclared foreign accounts and an index deficit. Intervention by the TAX team, answering the enquiry and refuting the allegations, resulted in acceptance by the tax administration and termination of the investigation.

Belgian national residents with accounts abroad faced enquiries from the tax administration based on information from international data exchanges. The administration suspected them of tax evasion if foreign income was not declared. Our intervention resulted in a correct valuation of taxable foreign income, applying a reasonable tax increase.

A company underwent a tax audit during which all the data on its computer servers was copied, including confidential correspondence with lawyers. These confidential communications were later used by the tax administration during a pre-taxation dispute. The case was referred to the district court judge, who ruled at first instance and on appeal that the making of a full copy was fundamentally wrong and that professional secrecy had been breached. The court ordered that the tax file be kept in sequester under a penalty of EUR 1,000 per day. The tax file then had to be purged by the leader of the Bar Council.

Since 2019, Belgian employers must record the award of RSUs and ESOPs on payslips. This new obligation led to checks by the tax administration on undeclared income from previous years. Non-declaration of this professional income was severely penalised, with application of extended valuation periods and a 50% tax increase. The TAX team revealed that employees had been wrongly advised in the past, ruling out tax evasion and extended valuation periods.

An industrial waffle bakery that used the exemption from passed-on withholding tax for shift and night work to ensure continuity of the production process faced the rejection of the total exemption applied. The tax administration rejected the exemption because the company could not provide sufficient evidence of the composition of the shifts and the operational reality of the exemption. This led to an outright rejection for a total of EUR 1 million for one year, with subsequent years also rejected. However, thanks to the mediation and expertise of our law firm, an agreement was reached with the tax administration, requiring payment of only 1% of the initial claim, thus avoiding court proceedings.

One of our recent successes involved an international transport company that depreciated its new trucks and trailers (chassis) over four years. However, the tax administration assessed a depreciation excess on the rolling stock and referred to a previous agreement with the company, which had agreed a 10-year depreciation period. This depreciation excess was more than one million euros, which meant that tax losses could not be taken into account and corporation tax had to be paid immediately. Our firm took up the case and defended the transport company all the way to the appeal court. The result? The tax administration was proved wrong and the depreciation period was reverted to four years, as originally applied by the company.

16. A Belgian company active in inland navigation had to periodically submit its fleet to technical inspections in order to receive the necessary certificates. As a result of these technical inspections, improvement works are carried out on the vessels concerned, an obligation common within the industry. These works come at a hefty cost and the company makes annual tax-exempt provisions to cope with these liabilities. This is a recurrent practice, which is also growing in significance under increasing liabilities and applied to the entire fleet. The tax authorities challenged the tax exemption of these provisions in a notice of amendment and wished to subject the created amount to corporate tax in full. The client came to us through her accountant, who had reached an impasse with the auditors. Tuerlinckx Tax Lawyers filed a substantiated response to the notice of amendment and consulted with the auditors on several occasions. After some discussion, they concluded the audit without further consequence.