The assessment is based on the taxable income of a financial year. For the application of the rules on statutory limitations and of new laws, a tax year is related to each taxable period. If the financial year corresponds with the calendar year, the tax year is the following calendar year (e.g. financial year closing 31 December 2022 corresponds with tax year 2023). If the financial year does not correspond with the calendar year, the tax year, in principle, equals the calendar year during which the financial year ends (e.g. financial year closing 30 June 2022 corresponds with tax year 2022).
As a general rule, the annual resident or non-resident CIT return must be filed, at the latest, on the last day of the seventh month following the end of the financial year. For instance, assuming that the accounting year has been closed on 31 December 2022, the corporate tax return needs to be filed, in principle, by 31 July 2023 at the latest (in practice we see that the due date can be postponed via a general or individual delay).
Payment of tax
CIT is payable within two months (some temporarily exceptions apply) following the issue of the tax assessment. Interest for late payment is charted at the (non-cumulative) rate of 7% per year, and 4% for calendar years 2022, 2021, 2020, and 2019.
The advance tax payments needed to avoid the CIT surcharge (see the Taxes on corporate income section) can be made in quarterly instalments. In the situation where the company's financial year ends on 31 December 2022, the due dates for the advance tax payments are 10 April 2022, 10 July 2022, 10 October 2022, and 20 December 2022. If the due date is a Saturday, Sunday, or a bank holiday, the payment is due on the next working day (11 April 2022 and 11 July 2022).
Advance tax payments give rise to a tax credit. For tax year 2023, the tax credit amounts to 9%, 7.50%, 6%, or 4.50% of the advance tax payment made, depending on whether such payment has been made, respectively, in the first, second, third, or fourth quarter.
If the total amount of credits exceeds the surcharge, no surcharge is due, but the excess is not further taken into account for the final tax computation. The taxpayer can choose to either have the excess reimbursed by the tax authorities or used as an advance tax payment for the next year.
Tax audit process
A tax audit normally begins with a written request for information from the tax inspector. The taxpayer must provide the data requested within (in principle) one month. Any documentary evidence considered relevant to the audit can be requested and reviewed by the authorities. Once the tax inspector has completed the analysis, any adjustment is proposed in a notification of amendment outlining the reasons for the proposed amendment. The taxpayer has a month to agree or to express disagreement. The tax inspector then makes an assessment for the amount of tax that the tax inspector believes is due (taking into account any relevant comments of the taxpayer with which the inspector agrees). Thereafter, the taxpayer has a year within which to lodge an appeal with the Regional Director of Taxes. The decision of the Regional Director of Taxes may be appealed and litigated. In a number of circumstances, the intervention of the courts can be sought prior to receiving the decision of the Regional Director of Taxes.
Pilot projects on horizontal monitoring are also in progress.
Tax supplements resulting from a tax audit will imply an effective tax cash out for audits linked to tax year 2019 and following (financial years ending 31 December 2018 or later), without the possibility to offset these supplements against any tax deductions (with the exception of the current year DRD). These tax supplements will thus constitute a minimum tax base. This measure, however, only applies if tax penalties equal to or higher than 10% are effectively applied.
Statute of limitations
Based on the Belgian income tax statute of limitations, the period during which the tax authorities are authorised to perform a tax audit and adjust the taxable basis is three years starting from the first day of the tax year, unless the company’s financial year does not correspond to the calendar year.
Further to a tax procedure reform in 2022, some extended investigation and assessment periods were introduced, but the following statutes of limitations remain unchanged:
- the ordinary period of three years;
- the period of five years for WHT;
- certain longer statutes of limitations that apply in some specific cases (e.g. foreseen in Art. 358 BITC).
In addition, as from tax year 2023, the investigation and assessment periods are extended to:
- 4 years in the event of failure to file a return or for late submission of a return;
- 6 years for certain cross-border cases*:
- companies filing a local file or a country-by-country report;
- companies filing a form 275F for payments made to tax havens;
- companies that apply for an exemption, a waiver or a reduction of withholding taxes based on a double tax treaty or an EU Directive;
- companies that apply a Foreign Tax Credit in their tax return;
- when information is obtained from foreign authorities based on DAC6 and DAC7;
- 10 years for so-called ‘complex’ tax returns in the following cases*:
- presence of a hybrid mismatch;
- application of CFC rules;
- presence of a legal construction that is reportable for cayman tax purposes;
- 10 years (instead of 7 years) in cases of fraud. The tax authorities still have to notify the taxpayer of the intention to apply the extended period in case of suspicion of fraud. However, it is no longer required to state the precise indications of fraud at this stage.
*The new periods of 6 and 10 years (for complex tax returns) cannot be used to examine certain disallowed expenses (including car costs, restaurant costs or promotional gifts).
For social security contributions for employees, a statute of limitations of three years (ten years in case of fraud), is applicable. Social security contributions for employees are only due by the end of the month following the quarter to which the contributions are related. Hence, the statute of limitations will only start on the first day of the second month following the relevant quarter.
Belgian ruling practice
Belgium has a long tradition of providing formal and informal rulings. Currently, a taxpayer may request an advance tax ruling on a wide range of subjects, including, but not limited to, CIT, individual tax, non-resident income tax, legal entity income tax, VAT, customs, and registration duties. The filing of the official ruling request is preceded by a prefiling meeting, which can be anonymous. The request should cover a ‘specific and concrete’ operation, which effectively is envisaged to be realised in the foreseeable future. The ruling should be filed before the transaction takes place. In practice, the ruling decision should be granted prior to the filing of the CIT return of the year of the transaction. A ruling is binding upon the Belgian tax authorities for a renewable period of a maximum of five years. Delivery of a requested ruling takes, on average, three months.
The Ruling Office is autonomous from the Belgian tax authorities and has the legal authority to issue decisions, which are, in principle, binding upon the Belgian tax authorities. The Ruling Office increasingly has adopted a constructive approach towards the taxpayer and is seen in the Belgian tax practice as a powerful insurance instrument in ascertaining the Belgian tax treatment of contemplated operations.
Topics of focus for tax authorities
Topics of interest to Belgian tax authorities include:
- WHT audits (cf. Danish CJEU cases regarding abuse and beneficial ownership).
- Transactions with entities based in tax havens.
- Participation exemptions / DRD regimes (including the so-called 'subject-to-tax' conditions).
- Structures aimed at tax optimisation for the group.
- Transfer pricing audits by the special transfer pricing investigation unit (deviating profit margins compared to prior years, material drop in operating profit or turnover, structurally loss-making entity, thin capitalisation, and others).
- Professional WHT audits (exemptions, foreign employees, Belspo certificates).
- The application of the copyrights regime.
- The qualification of rental income as real estate income (versus professional income).
- The reporting of foreign accounts and foreign real estate.
- The application of the special expat tax regime and foreign travel days.
- Tax exemption for days abroad.
- The deductibility of interest payments (e.g. to tax haven companies).
- Tax-exempt provisions for risks and charges.
- Companies with abnormal turnover.
- Irregular use of carried forward tax losses.
- 80%-limit regarding premiums for complementary pension.
- Companies with foreign revenues.
- Capital increases.
- Exceptional costs.
- Liquidation reserve.