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 2020 corresponds with tax year 2021). 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 2020 corresponds with tax year 2020).
As a general rule, the annual resident or non-resident CIT return cannot be filed less than one month from the date when the annual accounts have been approved and not later than six months after the end of the period to which the tax return refers. For instance, assuming that the accounting year has been closed on 31 December 2020, the corporate tax return needs to be filed, in principle, by 30 June 2021 at the latest (this deadline is often postponed).
Payment of tax
CIT is payable within two months following the issue of the tax assessment. Interest for late payment is charted at the (non-cumulative) rate of 7% per year, and a rate between 4% and 10% as of tax year 2019 (4% for calendar years 2019 and 2020).
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 2020, the due dates for the advance tax payments are 10 April 2020, 10 July 2020, 10 October 2020, and 20 December 2020. If the due date is a Saturday, Sunday, or a bank holiday, the payment is due on the next working day.
Advance tax payments give rise to a tax credit:
|Tax credit (tax year 2021)||CIT (standard regime) (%)||CIT (under conditions) (%)||PIT (%)|
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.
In response to COVID-19, the tax credit for the third and fourth quarter of 2020 has been increased (from 6% to 6.75% for the third quarter and from 4.5% to 5.25% for the fourth quarter). However, the increase is not applicable for companies which (i) redeem own shares, (ii) reduce their capital, or (iii) distribute or attribute any dividends between 12 March 2020 and 31 December 2020.
Companies paying bonuses to the directors, companies with a shareholding in a company located in a tax haven country and companies that have made payments to tax haven companies (unless these payments can be justified based on specific grounds) are also excluded from the measure (see PwC's COVID-19 Updates).
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 30 days 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 six months 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.
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 (except in case of fraud, where the statute of limitations is extended to seven years) starting from the first day of the tax year, unless the company’s financial year does not correspond to the calendar year. The same statutes of limitations are applicable for social security contributions, with the difference being that the statute of limitations begins to run from the end of the month following the month for which the social security contributions were due. For withholding taxes, the statute of limitation is in any event 5 years. In specific cases, there are also longer statutes of limitations (under certain conditions).
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 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 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:
- Transactions with entities based in tax havens.
- Structures aimed at tax optimisation for the group.
- Significant increase in 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).
- Significant increase in professional WHT audits (exemptions, foreign employees).
- WHT audits (cf. Danish CJEU cases regarding abuse and beneficial ownership).
- 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.