Belgium: Assessment periods for income tax and VAT extended

A law published in the gazette on 30 November 2022 extends assessment, investigation, objection, and retention periods for both income tax and value added tax (VAT). The specific changes are described below.

Assessment periods

• When the tax authority wants to modify a tax return filed on time, the assessment period remains three years. However, in the case of a tax return filed late or not at all, the assessment period becomes four years.
• When the tax return contains an international element, an assessment period of six years applies. An international element includes (exhaustively) transfer pricing documentation, payments to tax havens, foreign tax credits, exemption or reductions of movable withholding tax based on an income tax treaty or EU directive and information received by the tax authorities in the context of mandatory automatic exchange of information for cross-border arrangements (DAC6) and reporting obligation for digital platform operators (DAC7).
• In case of a complex tax return, a new assessment period of ten years applies. A complex tax return is limited to the cases where a hybrid mismatch, a controlled foreign company (CFC), or a legal construction is involved.
• The new assessment periods of six and ten years in the context of an international element or a complex tax return, respectively, do not apply when there is only an assessment on certain disallowed expenses (such as car or reception expenses).
• In case of fraud, the assessment period also becomes ten years (instead of seven).

Investigation periods

The investigation periods are adjusted in parallel to the assessment periods. Prior notification is necessary to apply the investigation period in case of fraud; prior notice of presumptions of fraud based on indications of fraud should then be given on pain of nullity of the assessment.

Retention period

The period during which taxpayers must retain necessary documentation is extended from seven to ten years.

Objection period

The period during which a claim against assessment can be filed is extended from six months to one year.

Effective date

The above measures become effective from assessment year 2023. However, the extension of the objection period becomes effective 1 January 2023. 

The statute of limitations for the collection of VAT becomes four years in the case of a tax return filed late or not at all, and ten years in case of fraud.

The retention period is also extended from seven to ten years.

These measures apply to VAT due from 1 January 2023. 

The law also includes the following selected measures:

• The legal interest rate for 2023 is 4% resulting in a late payment interest of 4% and moratorium interest of 2% for the purposes of income tax, and a late payment interest of 8% and moratorium interest of 6% for purposes of VAT.
• The tax authority can impose a penalty payment for obstruction of the exercise of investigative powers, including in the case of an investigation upon request of another member state (for both income tax and VAT).
• The tax reduction for the installation of electric charging stations is increased from €1.5 to €1.75 (from 1 January 2022) and to €8 for “bidirectional” charging stations (from 1 January 2023).
• Non-justified costs and hidden gains subject to the secret commissions tax are non-deductible expenses (from 10 December 2022).
• A refundable tax credit for the increase of lump sum mileage allowance for business trips between 1 March 2022 and 31 December 2022 is introduced.

Read a December 2022 report prepared by the KPMG member firm in Belgium