On 24 May 2023, the Belgian Data Protection Authority (DPA), the authority responsible for enforcing the EU’s General Data Protection Regulation in Belgium, issued a major decision (“Decision”) concerning information exchanges pursuant to the US Foreign Account Tax Compliance Act (FATCA). The Decision declares the information reporting required of the Belgian tax authority and Belgian financial institutions under FATCA to be unlawful because it violates the privacy rights and protections afforded to Belgian residents under the GDPR, as well as the rights to a private life and protections of personal information guaranteed by the Charter of Fundamental Rights of the European Union.
At the beginning of this year, the European Parliament proposed certain amendments with respect to the EU initiative to target so-called “shell” entities (i.e., entities which are considered to be devoid of economic substance). The European Commission published already in 2021 a proposal for an EU Directive intended to neutralize the misuse of such shell entities in the EU for tax purposes (also known as “ATAD 3” or “Unshell Directive”). The tax world raised, however, a lot of concerns regarding this initiative and such in particular in light of the many uncertainties on how to interpret the proposed text.
Since the decisions of the European Court of Justice in the so-called “Danish cases”, passive income streams are being scrutinized more than ever across Europe. This is not different in Belgium, where we have seen a substantial increase in tax audits focusing on passive income streams where withholding tax is being claimed also in the framework of business-driven structures.
Following a new bill, the Belgian tax authorities have the right to request taxpayers who keep their books and records digitally to submit them through a secured online platform. This new provision lowers the barrier for the Belgian tax authorities to perform a tax audit and could thus possibly increase the number of tax audits in the future. This would also result in a substantial increase of digital data available to the Belgian tax authorities, which allows datamining in relation to the information submitted and therefore more efficient tax audits.
A new and extended version of the Securities Account tax was introduced in Belgium by the Law of 17 February 2021 that entered into force on 26 February 2021. The new tax takes the form of an annual tax of 0.15% on securities accounts that exceed EUR 1 million in average value (this includes financial instruments as well as the cash balance). The tax will first be due for the reference period starting on 26 February 2021 and ending on 30 September 2021.