Tax regularisation is a must for anyone who still has undeclared black income or assets
Tax regularisation has been around since 2004, but it is more topical than ever. Even more strongly: anyone who has ever enjoyed black income or assets, whether abroad or in Belgium, and subsequently failed to regularise their situation (in the correct manner), must realise that they are in the eye of a perfect storm that the Belgian government has carefully built up.
Common Reporting Standards (CRS)
Long ago, the question was whether black income and assets held mainly abroad would come to light. Today, this question no longer needs an answer: every year, the Belgian tax authorities receive information from more than 100 other countries about all Belgians who enjoyed income in those countries (based on the so-called Common Reporting Standards or CRS). These countries also include Luxembourg and Switzerland, and even several so-called more exotic “tax havens” (click here for the list of affiliated countries).
Do you have a bank account abroad? The Belgian tax authorities are informed of this annually without having to ask for it. In this way, all Belgians who own assets abroad and acquire income from them without declaring these assets and this income run the risk of becoming the subject of a tax audit every year. Granted, the tax authorities do not have the manpower to audit everyone annually, but the mere fact that the tax authorities see a flashing light above your return every year constitutes an annually recurring risk of an audit.
Ultimate Beneficial Owner (UBO)
Have you decided to hold your foreign assets in a structure? Even then, you will appear on the tax authorities’ radar. Based on the 4th European Anti-Money Laundering Directive, European companies have for some time been obliged to declare which natural persons control them.
The mere fact that your foreign bank account is held by a foreign company may still ensure that the Belgian tax authorities are not informed about the existence of this account based on the CRS. But the fact that you control this company is no longer kept hidden.
Although the obligation to declare UBOs currently only applies to European Member States, the question is how long it will take before this also becomes applicable to more exotic structures. The scandals that surface with clockwork regularity (such as the Pandora papers) are putting increasing international pressure on these countries.
The preventive anti-money laundering law
But the greatest pressure will perhaps come from your own financial institution.
Based on the preventive anti-money laundering legislation, your banker, but also your life insurer and brokerage firm, have long been obliged to draw up a profile of their clientele, and whenever they know, suspect or have reasonable grounds to suspect that funds, transactions or attempted transactions are linked to “money laundering”, they are obliged to report this to the Financial Information Processing Unit (CTIF/CFI).
Based on this, the banking sector has been putting pressure on foreign assets for some time now, and for several years has been demanding that assets originating from abroad are clean. Either you can prove this, or you must go through the Contact Point for Regularisations for a tax regularisation. The preventive anti-money laundering legislation, but also the criminal liability that banks potentially face when they participate in tax fraud or its concealment (art. 505 of the Criminal Code), are increasingly causing financial institutions to decide to refuse capital, and even to show banking clients the door.
Circular 2021_12 of the National Bank of Belgium (NBB)
Moreover, this pressure has been substantially increased since June 2021 by the National Bank of Belgium. In a Circular that applies to all banks, insurers and brokerage firms that are active in the field of wealth management or that issue life insurance contracts with a single premium (e.g. BRANCH 21 and 23) and repatriated or are repatriating large amounts, the NBB obliges the implementation of an internal audit.
In this internal audit, the banks must (1) describe the procedures relating to repatriation and tax regularisation that they have used over the years, and (2) carry out a “lookback” on old repatriations and tax regularisations on a sample basis by 30 June 2022 at the latest. If “significant shortcomings” remain from this exercise, the bank, insurer or brokerage firm must draw up a proportional action plan by 30 September 2022 at the latest.
The underlying reason for this exercise consists primarily of checking whether banks (especially in the period prior to 2016) did not too easily repatriate capital of which only the income over the last 7 years was declared, but of which the origin itself was not subjected to a tax regularisation.
This exercise is currently taking place in relative silence, but at many a financial institution it will lead to old, incompletely regularised files surfacing, which will probably be reported to the CTIF/CFI as early as the second half of 2022.
The possibility to carry out a tax regularisation expires on 31 December 2023
Already in the coalition agreement of the De Croo government, it was agreed between the coalition partners that the possibility of still applying for a tax regularisation via the Contact Point for Regularisations would end on 31 December 2023.
This intention has meanwhile also been legally enshrined in the Law of 16 March 2021.
Conclusion: the perfect storm
It is clear that the interplay of the aforementioned government measures ensures that anyone who still has black income or capital that has not been (fully) regularised runs the risk of getting into serious trouble from 2022 onwards.
This can still be avoided until 31 December 2023 by submitting a file for tax regularisation to the Contact Point for Regularisations.
Everest (anti)fraud as your partner
Our law firm has already assisted hundreds of clients with such a problem during the various regularisation waves, and moreover enjoys an excellent reputation in the field of tax regularisation. Mr Stijn De Meulenaer has written several publications on the theme, and moreover frequently gives lectures and seminars in which he – often together with the Chairman of the Contact Point for Regularisations – explains the possibilities for and necessity of tax regularisation.
Everest (anti)fraud has always chosen to subject not only the income, but also the origin of the capital to a tax regularisation, which ensures that we can rectify your file in a credible manner where necessary.
Do you have any questions? Do not hesitate to contact us without obligation via anti-fraude@everest-law.be.
Also read our blog on “regularisation of Belgian capital”