Monday, November 19, 2015

Although last DLU, which ended December 31, 2013, was theoretically enacted to terminate any regularization of assets and income not declared to the Belgian tax authorities, it was still possible to further proceed with the regularization of these assets. Indeed, it appeared that the taxpayers, through their counsel, made contact with the local tax authorities to negotiate agreements regarding the regularization terms. It has therefore proved that the applications for regularization were treated differently depending on the residence of the taxpayer.

To remedy this problem, the Special Tax Inspectorate (“ISI”) was responsible for receiving applications for regularization of all taxpayers, regardless of their tax residence. The latter agreed to regularize for an equivalent cost to the tax evaded, increased of 50% and interest for delay fixed at 7% per annum.

However, in summer 2015, the Special Tax Inspectorate announced it no longer accept applications for regularization from taxpayers residing in Brussels, thus leading again to differences in treatment depending on the tax residence of the taxpayer.

The Government has therefore decided to introduce a new tax regularization procedure called "DLU quater" which will come into force on 1st January 2016. The new regulation will target all types of income and capital. The cost will vary depending on its purpose. If it relates to investment income, the tax normally due, ranging from 15 to 25%, will be increased by 20 points. The cost of regulation will increase annually by 1% from 2016 to 2020. The non-taxable gains on shares will remain for its tax-exempt even if they were made on a "non official" account. Regarding the regularization of a non-prescribed inheritance and of property income, details are still awaited. Regarding capital fiscally prescribed, they will be regularized at a rate of 36%.

This new DLU occurs in an international context of fiscal and financial transparency. Below, the current state of the expansion of information exchange between States:

Note particularly that Luxembourg has announced the automatic communication of information to Belgium in 2016 and Switzerland from 2018.

To prevent the tax authorities to discover undeclared assets and incomes, we can only advise to use spontaneously this “fourth DLU”