Without any doubt the most "notorious" new tax rule, concerns the substantially modified article 344, § 1 of the Income Tax Code or the so-called "anti- abuse" rule.
The new anti-abuse rule provides that a legal act or series of legal acts is/are not binding upon the tax authorities if the tax authorities can demonstrate that "tax abuse" has been committed.
Tax abuse is defined as a transaction or a series of transactions, whereby the taxpayer avoids taxes or claims a tax benefit, contrary to the objective of the legal provision introducing the tax avoidance or tax benefit.
The tax authorities may prove the existence of tax abuse by all legal means (through presumptions or any other acceptable means of evidence, except for the oath) and on the basis of "objective" circumstances. When such "objective" circumstances can be demonstrated by the tax authorities, the burden of proof is shifted to the taxpayer who needs to demonstrate the existence of underlying non-fiscal "subjective" motives for his act(s).
In the Belgian press, the new provision is referred to as a "bazooka", as various tax specialists believe that the tax authorities could from now on "attack" almost any transaction or act which is essentially tax driven, even if the taxpayer has respected all tax and legal consequences and has not simulated any deeds or acts for tax purposes. Many believe that the new provision may even violate the principle of "legality" (i.e. the principle that any taxation should be based on a clear and specific rule of law).
The Minister of Finance has attempted to bring some peace in this debate by confirming in Parliament that in practice not much would change compared to the existing anti-abuse rules. At the same time, however, the Minister refused to give specific examples of legal acts or deeds that would be threatened by the new anti-abuse rule. It can therefore not be excluded that the new anti-abuse provision will create - even more than before - legal uncertainty and inevitably cause long and tenacious disputes with the tax authorities.
Moreover, the same anti-abuse provision is also introduced for registration duties (article 18 of the Registration Duties Code).
We believe that the most safe tax conduct or behavior from now on will need to be based on serious economic or financial business motives, as any purely tax driven structuring of deals will be more severely targeted by the tax authorities.
The new anti-abuse rule applies as of tax year 2013 (i.e. income year 2012 for individuals and corporations with an accounting year equal to the calendar year) as well as to any legal acts carried out during tax year 2012 provided that the accounting year closes as from the 6th of April 2012 on.
For the registration duties, the new anti-abuse rule will apply to all legal acts or series of legal acts carried out as of June 1st, 2012.As in many other countries, the Belgian budget is under pressure and the Government is in desperate need of additional funding. Resultantly, one may expect that the Belgian Government will be obliged to take even further action in the course of the coming year(s).