New legislation under discussion in Parliament changes two tax provisions in order to sharpen an existing tool of the tax authorities to counter tax abuse.

Art. 54 and 344, §2 BITC

Art. 54 BITC targets the deductibility of payments of interest, retributions for the concession of the use of patents and fabrication processes, and the remuneration of services.

Based on art. 344, §2 BITC the enforceability of the sale, cession or contribution of shares, bonds, debt claims, copyrights, patents, fabrication processes, trademarks, or sums of money can be denied by the tax authorities.

Limitation of scope

The new legislation limits the scope of these two provisions in order to increase legal certainty.

Only payments to or transactions with non-residents or foreign establishments are targeted provided:

  • There is a direct or indirect link of mutual interdependence. That link must be interpreted in a broad sense: interdependence can be economic, managerial or structural; and
  • The non-resident or foreign establishment is not subject to income tax or the payments or transactions are subject to a significantly more advantageous tax regime

Counter-proof possible

However, the taxpayer has two chances to avoid the application of the anti-abuse rules:

  • The effective tax is at least half of the tax which would otherwise be due in Belgium; or
  • The payments or transactions are authentic, i.e. made for valid business reasons that reflect economic reality.

Entry into force

The new provisions will apply to payments and transactions made as from 1 January 2024. Companies should assess the possible impact of the changed anti-abuse rules on their operations.