Belgium and the United States of America (US) entered into a bilateral Agreement on 23 April 2014 aimed to improve international tax compliance and to implement FATCA. In this Agreement Belgium and the United States detailed the practical implementation of the US-FATCA legislation under which the US will receive information on reportable accounts (US reportable accounts) of US-persons in Belgium. Based on the terms of the Agreement, the first exchange of information related to the year 2014 is scheduled for 30 September 2015.
As we write this, the bilateral Agreement has not yet entered into force. It is therefore not certain that the exchange will take place on 30 September. However, both Belgium and the US seem determined to implement the Agreement as soon as possible.
It is indeed important to note that the exchange of information under the Agreement is reciprocal.
Belgium will indeed receive information on the reportable accounts of Belgian residents maintained in the US (Belgian reportable accounts). This exchange of information is, on the basis of the Agreement, also to take place for the first time on 30 September 2015.
Since many years, Belgian residents for tax purposes (natural persons) have to declare in their annual tax return the existence of foreign bank accounts held by them, their spouses or registered partners, or their minor children. There is a similar obligation for foreign individual insurance contracts and defined foreign legal entities. Accounts held during 2014 must be declared in the tax return of 2015.
The Agreement does not define Belgian residents. Individuals are Belgian residents for tax purposes if their principal place of residence or the seat of their fortune is situated in Belgium. The principal place of residence and the seat of a fortune are factual criteria. It refers respectively to the center of vital interests and the place from which a natural person administers his worldwide fortune.
Belgian reportable accounts?
In general terms, a Belgian reportable account is a financial account maintained by a US financial institution and held by a Belgian resident. The information exchanged includes the identity of the account holder and the interest or dividend payments received.
Who might be affected by this US-Belgian information exchange?
Belgian residents for tax purposes (individuals and legal entities);
The spouse of a Belgian resident (insofar the spouses have to file a joint tax return in Belgium) or his registered partner (partners in a Belgian registered partnership file a joint tax returns)
US nationals (citizens) are subject to the Belgian-US information exchange (FATCA). If they are Belgian residents for tax purposes it is important to know that the information might also flow in the other direction.
What about US expats (US citizens) under the Belgian expat tax regime?
As they are presumed nonresidents of Belgium, and given the Agreement does not stipulate otherwise, they seem not to be subjected to the US-to-Belgium information exchange.
Following the entry into force of the Agreement and before an exchange takes place, both governments still have to provide written notice to each other when they are satisfied that the other jurisdiction has in place (i) appropriate safeguards to ensure that the information received shall remain confidential and be used solely for tax purposes, and (ii) the infrastructure for an effective exchange relationship is in place.
Whether or not 30 September 2015 will be the date on which the information exchange commences, Belgian residents (US-persons and others) with US financial accounts should be aware that this information exchange is upcoming.