Waiver of tax increases: courts can deviate from the minimum of 10%

In its decision of 22 March 2022, the Ghent Court of Appeal ruled that a tax increase of 10% seemed disproportionate to the nature and extent of the taxpayer's infringement and reduced the tax increase from 10% to 2.5%. 


The case concerned a purchase of shares followed by an immediate sale of those shares at a higher price. The Belgian tax authorities taxed the capital gain on the shares as miscellaneous income considering that it did not fall within the normal management of a private asset. A tax increase of 10% was applied which, in the case at hand, amounted to EUR 75,000.

Both the Bruges Court of First Instance and the Ghent Court of Appeal confirmed the position of the tax authorities.

However, with respect to the tax increase, the Court of Appeal ruled that the amount of the increase in absolute figures was disproportionate considering the nature and gravity of the infringement. In particular, the Court took into consideration the fact that the legal provision that was the subject of the discussion and, more broadly speaking, the concept of ‘normal management of an individual's private estate’, left room for interpretation.  

Consequently, the Court decided to reduce the tax increase from 10% to 2.5% which it considered more proportionate in the case at hand. 

What will it mean in practice?

This decisions by the Ghent Court of Appeal sets an interesting precedent since a tax increase rate of 2.5% is not expressly provided for in tax legislation. 

Similarly, several courts have recently reduced or waived the statutory fine of EUR 6,250 where there has been a failure to report a legal structure, even though tax legislation does not expressly provide for this possibility either (see in this respect: Civ. Antwerp, 28 February 2021 ; Civ. Bruges, 26 October 2021 ; Civ. Antwerp, 14 February 2022).

Given this recent trend, it may be worthwhile coming before the Courts to challenge the application of a tax increase (even if the rate is as low as 10%) or any other tax fines (e.g. fines imposed in VAT matters, fines relating to transfer pricing documentation or other documentation filed in the context of DAC 6 and 7).

This is especially true for companies with carry forward losses or other tax deductions because for such companies the application of a 10% tax increase will have a more significant impact.  

As a matter of fact, since 1 January 2018, companies cannot deduct the part of the result that is subject to an adjustment of the tax return for which a tax increase of a percentage equal to or higher than 10% is effectively applied, which leads to a cash-out. This rule is questionable in many aspects. In our opinion, it infringes the principle of legality. 


This recent trend in case law provides an opportunity to mitigate the significant impact of tax increases and fines.