Wednesday, 28 January 2015

Belgium: Reporting obligation applies to payments made to Luxembourg

The requirement for companies to report payments to Luxembourg persons continues to apply for 2014 corporate tax returns filed in 2015.
Article 307 of the Belgian Income Tax Code requires companies to report annually any payments made, directly or indirectly, to persons established in a tax haven or in a country which, during the entire financial year in which the payment was made, is considered not to effectively and substantially apply the OECD standard on the exchange of information. Failure to comply with the reporting requirement will result in the payment being nondeductible.
In 2013, the OECD Global Forum on Transparency and Exchange of Information rated four countries as noncompliant: the British Virgin Islands (which also is considered a tax haven), Cyprus, Luxembourg and the Seychelles. These countries are the only noncompliant countries among the 64 jurisdictions that have been given an overall rating by the Global Forum. Although Luxembourg has taken a number of steps to significantly improve its position and expects the OECD to upgrade its status to (largely) compliant by mid-2015, the country still is considered noncompliant for purposes of article 307. As a result, the majority of companies whose financial year corresponds to the calendar year must report all direct and indirect payments made to Luxembourg persons in 2014 on a specific form attached to their 2014 corporate tax return filed in 2015. The Belgian finance minister announced during a meeting held on 16 December 2014 that the tax administration is working on new guidance that would supplement a circular issued in 2010 on the reporting requirement.
Source: Deloitte