Payments to 'tax havens': court case brings clarification

What is it about? 

Belgian companies must declare their payments to tax havens if they collectively exceed €100,000. A declared payment is only deductible if the company proves that it was made in the context of actual and genuine transactions and insofar as the recipient is not an artificial arrangement. The Antwerp Court of First Instance confirms that there can only be an "artificial arrangement" if it is aimed at avoiding tax "in Belgium" (Antwerp Court of First Instance, judgment of 19 February 2024). 

What is the talking point? 

For a long time, it has been unclear whether the deduction prohibition means that the company must prove that the framework in which the payments were made is a means for the parties (or one of them) to escape Belgian income taxes or a foreign tax. However, the legislator's objective seems clear: the condition is that evasion of Belgian taxes is required. The tax authorities have disregarded this, but have now been knocked back by the court.  

Conclusion 

It remains to be seen whether the tax authorities will appeal this judgement.  

If you have any questions in this regard, please do not hesitate to contact your trusted BDO advisor or Hubert Hellraeth.