The New Belgian government has recently announced a series of new proposed legislative measures designed to reinforce its powers to fight against tax evasion.
Amongst the draft measures proposed is a new rule that would effectively reverse the existing anti-abuse rule in relation to tax planning structures. The new rule would allow the tax administration to challenge a legal structure or reorganization and require the tax payer to demonstrate that the structure has a bona fide purpose and that its principal purpose is not to avoid or diminish tax.
The proposal has already caused provoked a fierce debate in Belgium and many eminent specialists have suggested that the proposed measure is anti-constitutional and, if enacted, is likely to be successfully challenged and annulled by Belgian’s constitutional court.
It is clear that if the new rule does become law it will make tax planning in Belgium, including international tax planning, considerably more difficult.
Other controversial measures that are announced include an increase in the tax administration’s power to carry out searches in private premises, where the current requirement to obtain a prior search warrant from an investigation judge will be partially relaxed.