I. Introduction
The Belgian general anti-abuse rule, set out in article 344, §1 Belgian Income Tax Code 1992 (hereafter BITC92), has long occupied a central place in tax controversy. It is also one of the most litigated areas of Belgian tax law, precisely because it sits at the intersection of two competing principles. On the one hand, taxpayers remain free to organise their affairs in a tax-efficient manner. On the other hand, the tax authorities may disregard arrangements that amount to tax abuse. The difficulty, as always, lies in drawing the boundary between legitimate tax planning and abusive structuring.
Two recent decisions are particularly instructive in this respect. The first is the Court of Cassation's judgment of 22 January 2026, confirming that, when applying article 344, §1 BITC92, the tax authorities may not rewrite the facts of a case. The second is the Antwerp judgment of 3 February 2026, which rejected an abuse challenge against a structure in which a group separated operating activities from real estate before selling the shares of the real estate company rather than the underlying assets. Together, these cases do not weaken the Belgian GAAR. But they do clarify something important: the anti-abuse rule is not a licence to ignore economic reality, nor does it prevent taxpayers from choosing a legally and commercially coherent route merely because that route is tax-efficient.
A. GAAR in Belgium: a powerful rule, but not an unlimited one
1. The basic principle. The starting point remains familiar. In principle, taxes are levied on the legal and factual structure that the taxpayer has actually implemented. Article 344, §1 BITC92 creates an exception to that rule in cases of tax abuse. In broad terms, the provision allows the tax authorities, subject to the statutory framework, to disregard certain legal acts or combinations of acts where the taxpayer has placed themselves outside the scope of a tax provision, or claimed the benefit of a tax provision, in a manner that defeats the purpose of the law.
2. The recurring difficulty in practice. What has always been contentious is the precise mechanics of the recharacterization power. Can the tax authorities merely disregard legal acts and substitute others? Must they stay within the same economic transaction? To what extent may they rely on an alternative transaction that, from their perspective, should have occurred? And how far can they go where the taxpayer has built a multi-step structure with both tax and non-tax effects?
B. Why these cases matter
The Court of Cassation's January 2026 judgment (Cass. 22 januari 2026, F.23.0040.N) goes a long way towards answering at least part of that debate. According to the Court, the redefinition mechanism under article 344, §1 BITC92 permits the tax authorities, in cases of abuse, to modify the legal form of a transaction by eliminating or substituting one or more legal acts. However, that does not permit the elimination or substitution of mere facts. Nor may they alter the economic operation itself. They must respect the transaction as actually carried out. That distinction between legal characterisation and factual reality is now central to any discussion of the Belgian GAAR.
II. The Court of Cassation: the tax authorities may not change the facts
A. The factual background
The facts underlying the Court of Cassation's judgment were technically complex and involved a sequence of transfers of shareholdings within a group structure. A natural person had acquired a package of shares and later transferred that package further in exchange for certificates. The structure was therefore not a simple cash sale, but part of a broader chain of corporate and legal transactions.
Despite that complexity, one factual point stood out: the individual concerned had not actually received any payment in the course of those operations. There was no concrete inflow of money to him personally. That point became central to the dispute, because the tax authorities nevertheless sought to tax him as though he had personally received taxable income.
B. The administration's position
The tax authorities relied on articles 23, 24 and 25 BITC92 and combined those provisions with article 344, §1 BITC92. Their reasoning was, in essence, that a payment made elsewhere within the group should be treated, for tax purposes, as though it had been profit realised by the individual taxpayer himself.
C. The appellate court's approach, confirmed by Cassation
The Ghent Court of Appeal had already rejected that reasoning. It found that the tax authorities could not, through article 344, §1 BITC92, disregard the actual facts of the case and tax the individual on the basis of a fictional receipt of income. The Court of Cassation upheld that approach and confirmed an important limit on the operation of the general anti-abuse rule. The Court recalled a fundamental principle: subject to the anti-abuse rules provided for by law, income taxes must in principle be levied on the basis of the legal structure actually used by the taxpayer. That starting point matters: GAAR is an exception to the normal rule, not a general licence for the administration to reconstruct transactions from scratch.
D. The key legal clarification
The most significant contribution of the judgment lies in the way the Court described the limits of the redefinition power under article 344, §1 BITC92. The Court accepted that, where tax abuse is established, the administration may modify the legal form of a transaction by eliminating or substituting one or more legal acts. But the Court immediately drew a boundary around that power: the provision does not permit the elimination or substitution of mere facts, and when the administration substitutes one or more legal acts, it must still respect the transaction. There is an unlawful alteration where the administration no longer limits itself to changing the legal form of the taxpayer's economic operation, but instead changes the economic operation itself.
That distinction is fundamental. GAAR may operate on legal characterisation, but not on factual reality. The administration may challenge how a transaction has been legally structured, but it may not invent a different set of underlying events.
E. A broader lesson for GAAR disputes
Belgian GAAR remains a rule of legal recharacterisation, not a tool of factual invention. That proposition is especially relevant in cases involving complex group structures, indirect holdings, certificates or layered transactions, where the tax treatment may depend on a close analysis of how value and rights actually moved within the structure.
III. The Antwerp share-deal case: choosing a share deal is not abuse by default
A. The structure under review
A holding company owned a subsidiary operating a residential care centre. That subsidiary both held the real estate and carried on the operating business. As part of a partial demerger, the operating activity was transferred to a pre-existing group operating company. After that transaction, the original company retained only the real estate. The holding then sold the shares in that real estate company to a third-party investor. Meanwhile, the new operating company became the operator of the care centre under a long-term lease. The holding claimed the exemption on the capital gain realised on the sale of the shares under article 192 §1 BITC92. The tax authorities denied the exemption, arguing that the sequence of transactions amounted to an artificial construction under article 203, §1, 7° BITC92 and also to tax abuse under article 344, §1 BITC92: in substance, an asset deal converted into a share deal to avoid taxation on the real estate gain.
B. The court's view on business reasons
The Antwerp Court of Appeal (Antwerp, 3 February 2026) was not persuaded. It accepted that the partial demerger formed part of a wider group restructuring to separate real estate from operations. The corporate records also showed that the new structure was intended to provide a more accurate picture of operational contributions through market-based rent charging and to improve the tradability of the real estate. Those are not cosmetic considerations: they go directly to governance, financing, valuation and investor-readiness.
C. The financing rationale
The court also attached weight to the group's financing rationale. The parent company that had previously funded the group had stopped doing so, while bank financing alone was insufficient. By selling the shares, the holding received the proceeds directly and used them to support financing and investment; the court noted that the proceeds were in fact reinvested. Significantly, the court noted that this use of proceeds for reinvestment was not disputed.
D. Market practice and transactional reality
The court emphasised that share transfers are a common market practice in the Belgian real estate sector. That matters because it undercuts the suggestion that a share deal is inherently artificial or exceptional. In the absence of simulation, the tax authorities had to respect the separate legal personality of the group entities. A share deal can be the natural commercial instrument for transferring an investment, particularly where there is a desire to preserve contractual continuity, maintain the property vehicle, separate operating risk from asset ownership, or facilitate financing.
E. Why the "asset deal alternative" was not decisive
The court also considered who would actually have realised the gain under an alternative asset sale. If the real estate had been sold directly, the gain would have arisen at the level of the property-owning company, not at the level of the holding, which had never itself owned the real estate. For the funds to be redeployed elsewhere in the group, they would then, presumably, have had to move upstream. In those circumstances, it was far from obvious that an asset deal would have been simpler than a share deal.
F. The outcome
The court held that the combination of the partial demerger and the share sale formed part of an overall set of transactions designed to implement the business reasons underlying the reorganisation and therefore did not constitute abuse. The exemption on the capital gain could not be denied.
IV. Reading the two cases together
The Court of Cassation makes clear that the tax authorities may challenge legal form, but not replace the taxpayer's actual facts with imagined ones. The Antwerp judgment shows that a tax-efficient structure is not abusive merely because another route would have produced more tax: what matters is whether the chosen transaction reflects genuine economic and organisational reality. The cases are complementary — one defines the outer limit of recharacterisation, the other shows how courts assess whether a structure is abusive in the first place.
V. Practical implications for taxpayers and advisers
A. Economic reality must be demonstrable
These cases do not eliminate GAAR risk. Belgian tax authorities will continue to scrutinise restructurings, share deals, pre-sale reorganisations and intragroup transactions, especially where they produce a materially better tax result than a more straightforward alternative. Economic reality matters, but it must be demonstrable: visible in the chronology, minutes, financing process, valuation logic, contractual architecture and post-closing conduct.
B. Alternative routes must be tested carefully
Taxpayers should be careful in how they frame alternative transaction routes. Administration claims that "this could simply have been done as an asset deal" or "this amount should really be treated as income of person X" must be tested rigorously: Was the taxpayer in fact the legal owner of the relevant asset? Would the alternative route really have been simpler? Would the funds actually have accrued to the same person or entity? Does the supposed substitute preserve the economic operation, or does it rewrite it?
C. GAAR is about legal qualification, not factual invention
Where an assessment depends on treating a non-event as though it occurred, or on attributing an amount to a taxpayer who never received it, the Court of Cassation's reasoning provides strong support for challenge.
VI. Conclusion
The Belgian general anti-abuse rule remains a potent weapon, but recent case law shows that it is not boundless. The Court of Cassation has made clear that the administration cannot use article 344, §1 BITC92 to alter the facts or recast the economic operation actually carried out. The Antwerp court has confirmed that the choice of a share deal over an asset deal is not abusive by nature where the transaction is embedded in a broader restructuring and supported by genuine commercial, financing and organisational considerations.
For taxpayers and advisers, the message is both reassuring and demanding. Reassuring, because the courts are drawing meaningful limits around the administration's recharacterisation power. Demanding, because those limits will only be of practical use where the taxpayer can clearly show what the transaction really was, why it was undertaken, and how the actual facts differ from the fiction advanced by the tax authorities.
In short, GAAR is not dead, and it is not weak. But it remains what it should be: a rule against abuse, not a mandate to reconstruct reality.
Authors:
Jacques Malherbe and Rik Strauven — 20 April 2026.
